Some things could definitely have been arranged in another way both in the late 1980s and once the crisis was over us in the early nineties. BIS Review 80/1998  -3-  But the vital conclusion is, I believe, that the roots of the profound crisis stretched a long way into the past. An economic policy realignment was essential; a credible stability oriented policy had been lacking ever since the collapse of the Bretton Woods system in the early 1970s. It was high time to put this right. Making the new regime credible After the long period of high inflation, together with extensive economic problems and massive government deficits, the task of inspiring confidence in economic policy’s new direction proved difficult at first. Economic agents listened to the new approach with doubts and hesitation. As we know from other countries, however, creating confidence in a new regime with low inflation is a rather long process that takes time. Moreover, if the work of keeping inflation low and government finances in order is to be combined with low interest rates and stable growth, it is a task that never ends. In recent years the low-inflation regime has gained increased credibility. Besides a disciplined monetary policy for price stability, a major contribution to this has come from the consolidation of government finances. In just a few years a budget deficit at 12 per cent of GDP has been turned into today’s surplus.
According to the timetable for the new legislation, the Riksdag’s final decision will be made sometime in the middle of November. It will be followed by the appointment of the Riksbank’s new Governing Board, which will consist of eleven Delegates. One of its major tasks  BIS Review 80/1998  -4-  will be to appoint the Riksbank’s new Executive Board. This Board will consist of six full-time members who will direct the Riksbank and decide monetary policy as of January 1999. The present situation Sweden’s monetary policy is conducted in a flexible exchange rate regime and has an explicit inflation target. We sometimes use the following simple rule of thumb to describe what governs our actions: if the overall assessment of inflation indicates that in one to two years time the rate of inflation will deviate from the 2 per cent target, then the repo rate should be adjusted accordingly. Our approach is symmetrical, which means that it is equally important to avoid undershooting the target, as it is to avoid overshooting it. The Riksbank’s appraisal of inflation up to the autumn of 2000 and the monetary policy conclusions that can be drawn from this are presented in the Inflation Report we published last week. In order to visualise the consequences for the future path of monetary policy, the report is based on the working assumption of an unchanged repo rate.