A sound economy must be based on well-functioning real and financial sectors, and there can be no doubt that, in times to come, we will have to give still more thought to reducing financial risks and keeping them from interfering with the proper functioning of the system. If competition, volatility, globalization, and stresses threaten to pressure the banking industry into resorting to bad risk-taking practices, the responsible authorities and supervisors must take whatever steps are necessary to restore financial stability. 5  BIS Review 41/1999
they do not focus only on stabilising inflation but also take account of real economic developments and possibly other factors too. However, the present degree of flexibility in inflation-targeting policies has probably not always been regarded as so obvious as it is today. At least as far as Sweden is concerned, I think I am right in saying that it has been a gradual process that has brought us to where we are today. That is probably also true for many other inflation-targeting countries. Immediately after the announcement of the inflation target in 1993, the Riksbank tended to formulate policy as if the intention was to be anything but flexible. This may have been because the credibility problems in the 1970s and 1980s were considered damaging and were deemed to warrant “tough talk”. Whether it was a wise strategy to begin in this way with a one-sided focus on inflation is perhaps open to question. One could argue that it would have been better to choose a more balanced line from the outset. It might then have been possible to counteract some of the criticism levelled at the Riksbank for supposedly “focusing exclusively on inflation and completely disregarding employment”. From the mid-1990s and onwards, though, the Riksbank tried in various ways to clarify that we were not focusing solely on stabilising inflation. I believe it is correct to say that the implementation of policy also began to become more flexible around that time.