rfr · H90WRFR5 · 2022-03-31 00:00:00 — “The Impact of Monetary Policy on Household Borrowing - A High-frequency IV Identification.” Riksbank Working Paper Series No. , , , and . “The Swedish Covered and Links to Financial Stability.” 2013(2). “Eight Centuries of Global Real Interest Rates, R-G, and the ‘Suprasecular’ Decline, 1311-2018.” 845. “Going Negative: The ECB’s Experience.” Speech at the 35th Congress of , 26 . “Forward .” 11(S.1): 19-64. “Evaluation of the Riksbank’s Forecasts” Riksbank Study No. “The Mortgage Market in .” . “Let’s Talk about Negative Rates.” Speech given in 11 January 2021. -/media/boe/files/speech/2021/january/lets-talk-about-negative-interest-rates- speech-by-silvana-tenreyro.pdf. “The Treasury Market in Spring 2020 and the Response of .” CEPR Discussion Paper DP16410. “Interest Rate Cuts vs. Stimulus Payment: An Equivalence Result. NBER Working Paper 29193. “How Big is the Toolbox of a Central Banker? Managing Expectations with Policy-rate Forecasts: Evidence from .” Riksbank Working Paper Series No. Terms of Reference for Evaluation of the Riksbank’s Monetary Policy 2015-2020 The Riksbank (the Swedish central bank) is an authority under the Riksdag with responsibility for Swedish monetary policy. Since 1999, the Riksbank has had an independent status in relation to the Riksdag and the Government, and under the Riksbank Act (1988:1385), its objective is to maintain price stability. According to the legislative history of the Act, the Riksbank should also, without neglecting the objective of price stability, support the aims of general economic policy with the purpose of attaining sustainable economic growth and high levels of employment. The Riksbank has itself formulated the operative target of monetary policy. From 1995 to the autumn of 2017, the target was that inflation should be at a level of 2 per cent, measured as an annual percentage change in the consumer price index (CPI). Up until 2010, there was a tolerance interval around the target of plus/minus 1 per cent. On , the Riksbank decided to change the target, so that inflation should be 2 per cent, measured as an annual change in the consumer price index with fixed interest (CPIF). At the same time, a “variation band” was introduced of between one and three percentage points around the target. The Riksbank pursues what is known as a flexible inflation target policy. Under the Riksbank Act, the Riksbank shall also promote a secure and efficient system of payments. According to the legislative history of the Riksbank Act, this is a fundamental task of the Riksbank, but it is not actually one of the objectives of its activities. Neither the Act nor the legislative history provide a closer description of what is included in the task of promoting a secure and efficient system of payments. The Riksbank defines the task in connection with the bank having a responsibility for working towards stability in the financial system and ensuring that it is possible to make payments in a secure and efficient fashion. The Riksbank’s practical work within the field includes issuing banknotes and coins, ensuring that there is a central payment system, preventing financial crises through communication, analyses and monitoring of the financial system, influencing regulatory frameworks and legislation, and providing information about and maintaining contingency plans and tools for dealing with financial crises. The responsibility for financial stability is shared between the , the Swedish Financial Supervisory Authority, the Swedish Na- tional Debt Office and the Riksbank. These meet regularly in the in order to discuss financial stability and measures to deal with financial imbalances. TERMS OF REFERENCE FOR EVALUATION OF THE RIKSBANK’S MONETARY POLICY 2015-2020 Together with the central banks in all the EU member states, the Riksbank is part of System of Central Banks (ESCB). Activities in the ESCB and the Eurosystem (and the central banks in the countries that have adopted the euro) are regulated by means of the Treaty on European Union and a special statute which is annexed to the Treaty. The main objective of the central banks in the ESCB is to maintain price stability. Without neglecting this goal, the ESCB is to support general financial policy in the Union with the purpose of implementing the Union’s objectives. New Riksbank Act 2023 The last time the Riksbank Act was reformed was at the end of the 1980s, apart from the amendment providing increased independence at the end of the 1990s. Since then, the conditions affecting monetary policy have changed, especially during the last ten years in the wake of the financial crisis. At the end of 2016, the Government appointed a cross-party tasked with carrying out a review of the Riksbank Act and the monetary policy framework (Dir 2016:114). The inquiry, which was called , presented its final report to the at the end of (SOU 2019:46). In the report, the Committee provides proposals in the areas: mandate in monetary policy, mandate in financial stability, the Riksbank’s international activities, the Riksbank’s institutional and financial independence and the foreign reserves, the Riksbank’s organization, the Riksbank’s responsibility for cash management and crisis preparedness, and preconditions for democratic scrutiny of the Riksbank and the activities of the Riksbank. The new act should, according to the Committee’s proposal, come into force on 1 January 2023. The Riksdag’s Previous Monetary Policy Evaluations Since the Riksbank was granted its independent status at the end of the 1990s, has conducted an annual evaluation of current monetary policy. Since the middle of the 2000s, has also initiated three external and independent evaluations of the Riksbank and monetary policy, with approx. five years between them. The first was carried out by Professors and . This evaluation was of the period 1995–2005 and analysed such things as monetary policy and the formulation of the inflation target (2006/07:RFR1). The second evaluation was carried out by professors and for the period 2005–2010 and analysed such things as the Riksbank's actions during the financial crisis and responsibility for financial stability (2010/11:RFR5). The most recent evaluation was carried out by professors and and analysed the Riksbank’s monetary policy after the severe financial crisis during the period 2010–2015 (2015/16:RFR6). 1 TERMS OF REFERENCE FOR EVALUATION OF THE RIKSBANK’S MONETARY POLICY New Evaluation of Monetary Policy for the period 2015–2020 The current evaluation is to examine Swedish monetary policy for the period 2015–2020. An Extreme Period for Monetary Policy The period 2015–2020 is characterized by the aftermath of the financial crisis with low international demand, very low global inflationary pressures and relatively stringent financial policy as a consequence of factors such as banking and debt crises in Europe. In order to stimulate economic activities and cause inflation to rise, the central banks around the world have lowered their key interest rates to zero, and in certain countries including and the euro area, key interest rates have been reduced to below zero and have been negative during a longer period. As key interest rates have reached an interest floor, the central banks have taken other “unconventional” measures to make monetary policy even more expansive, primarily through the purchase of various forms of assets. One of the effects of this has been a rapid improvement of the balance sheets of central banks and that the banks today end up holding a growing proportion of assets in the world. In order to cause low inflation to come up to the target and counterbalance a strengthening of the Swedish krona, the Riksbank lowered the repo rate to – 0.1 per cent at the beginning of 2015, the first negative repo rate in Swedish economic history, which was then gradually lowered to –0.5 per cent. A careful increase of the repo rate towards zero was begun at the beginning of 2019 and at the end of , the repo rate was raised to zero. In 2015, the Riksbank also decided on a programme for the purchase of nominal and real government bonds to further increase liquidity in the Swedish economy. Up until the autumn of 2019, the Riksbank purchased government bonds for approx. billion, which corresponds to 45 per cent of the outstanding stock of Swedish government bonds, and further purchases have been decided up until the end of 2020. The Riksbank’s balance sheet almost doubled during the period 2015 to 2019. From the beginning of 2016 until the beginning of 2019, the Riksbank also had increased preparedness for making current interventions with the objective of combating a possible strengthening of the exchange rate of the SEK. Guidelines for the Evaluation The evaluation should be conducted according to the following guidelines: The Design and Effect of Monetary Policy • The evaluation is intended to analyse whether monetary policy during the period has been well-considered when it comes to reaching inflation TERMS OF REFERENCE FOR EVALUATION OF THE RIKSBANK’S MONETARY POLICY 2015-2020 targets and its mandates to support general financial policy and promote a secure and efficient payments system. •The evaluation is intended to analyse the effects these unconventional measures, i.e. the negative repo rate, the purchase of government bonds and the publicized increased preparedness for currency interventions, have had on the development of the real economy and on financial developments in . •The evaluation is intended to discuss and analyse the advantages and disadvantages of different unconventional measures in relation to more conventional monetary policy measures. The evaluation is intended in this context to analyse the risks and opportunities involved when up a solid balance sheet in the Riksbank. •Many of the Riksbank’s monetary policy measures during this period have been motivated by the actions of other central banks. The evaluation is intended to analyse and discuss the degrees of freedom of Swedish monetary policy vis-à-vis monetary policy in other countries. •The evaluation is intended to analyse the distributional effects the formulation of monetary policy has had during the period. •The evaluation is intended to scrutinize and analyse the Riksbank’s external communication during the period regarding developments in monetary policy and the measures the Riksbank has taken. •The evaluators is are free also to evaluate other issues, besides the points listed above, if they find that they are significant for developments during the period. •The evaluators shall make proposals for possible changes or improvements in the areas that have been evaluated. •The evaluation shall be presented in the form of a written report. •Since the evaluation is intended for broad public dissemination, the evaluation shall be written in an easily comprehensible and structured way. Working Methods and Reports •The evaluation should be started towards the end of 2020 or the beginning if 2021. •The finished evaluation shall be presented to by the beginning of 2022 at the latest. The evaluation shall then be published in the form of a report for broad public dissemination, in a Swedish and English version. Persons Interviewed by the Evaluators , Governor and , Deputy Head of General at the Riksbank (29 2021) , Deputy Governor () , Professor at , Governor 2009–2014 () , Member of () and First Deputy Governor 2012–2019 () Per , Deputy Governor () , Deputy Governor () , Deputy Governor (5 2021) , Governor 2017–2013 (12 2021) and , to the Director General, (26 2021) , Chief Analyst Nordea (26 2021) , First Deputy Governor (26 2021) , Head of (2 2021) , Head of Research Division and , Head of Modelling Division at the Riksbank (8 2021) , Chief Economist dustries (30 2021) , Head of General the Riksbank (31 2021) , Head of Monetary Policy Department the Riksbank (31 Au- gust 2021) , Chief economist and , Head of the co-oper- ation office for the trade unions within industry and senior economist Unionen () , Head of Financial Stability Department the Riksbank () Xin , at the Riksbank () PERSONS INTERVIEWED BY THE EVALUATORS 2 , Head of Markets Department the Riksbank () , Director General () , State Secretary Kainelainen, Head of Economics Department () and , the Swedish Trade Union Confederation () , Economist Confederation of () , Chief Economist and , Swedish Financial Supervisory Authority () , Chairman of () , Head of General , , Deputy Head, , General , and , at the Riksbank () , , Per and , Deputy Governors () , Professor of (29 No- vember 2021) , Head of Monetary Policy Department, , Deputy Head, , Head of Modelling Division, , Head of Research Division and , Head of Macrofinancial Analysis Division at the Riksbank () , Governor, and , First Deputy Governor () , at the Riksbank () Öppen utfrågning om den aktuella penningpolitiken Seminarium om livslångt lärande Regeringens resultatredovisning för UO15 och UO16 – utbildningsutskottets uppföljningar 2012–2018 Hur påverkas den finansiella stabiliteten av cyberhot, fintech och En översikt av forskning, aktörer och initiativ Uppföljning av beslutet att bilda export- och investerings- Öppen utfrågning om finansiell stabilitet . tech och cyberhot – Hur påverkas den finansiella stabiliteten? ARBETSMARKNADSUTSKOTTET, KULTURUTSKOTTET, SOCIALFÖRSÄKRINGSUTSKOTTET, SOCIALUTSKOTTET, Offentlig utfrågning på temat psykisk hälsa i ett Agenda Öppen utfrågning inför den forskningspolitiska propositionen Mobilitet på landsbygder – forskningsöversikt och nuläges- Forskarhearing om den representativa demokratins utmaningar i po- offentliga utfrågning om överskuldsättning Öppen utfrågning om den aktuella penningpolitiken Öppen utfrågning om den aktuella penningpolitiken Uppföljning av tillämpningen av gymnasiereglerna samhällsuppdrag om markförsäljning – en uppföljning Artificiell intelligens – Möjligheter och utmaningar för och Punktlighet för persontrafik på järnväg – en uppföljning Digitalt seminarium om uppföljningen av tillämpningen av gymna- Lantbrukets sårbarhet – en uppföljning Öppen utfrågning om finansiell stabilitet – Risker i kölvattnet efter Digital offentlig utfrågning med anledning av delbetänkande om äldreomsorgen under pandemin Öppen utfrågning om den aktuella penningpolitiken Uppföljning av lagen om kollektivtrafikresenärers rättigheter – hur har lagen fungerat för resenärerna? Offentlig utfrågning om järnvägens punktlighet Öppen utfrågning om för Offentlig utfrågning om rapporten – Öppen utfrågning om Finanspolitiska rådets rapport Digital offentlig utfrågning om sjukdomen ME/CFS och infektions- Nyheter i sociala medier – en forskningsöversikt av användning och effekter ur ett medborgarperspektiv Öppen utfrågning om den aktuella penningpolitiken den offentliga utfrågning om precisionsmedicin Öppen utfrågning om finansiell stabilitet – Sårbarheter och mot- ståndskraft i ekonomin i ljuset av ökande skulder hos hushåll och Utvärdering av penningpolitik 2015–2020