Economic growth in the United States had been higher than expected and the first signs of a recovery in Europe were now visible. Meanwhile, a distinct upturn in the Swedish economy was increasingly apparent. The forecasts were revised upwards and the Executive Board now agreed that further interest rate reductions were no longer on the agenda. By the middle of August, at the monetary policy meeting on the 12th, the picture of a stronger economic development in Sweden was even clearer. The Board therefore concurred on a high future growth rate that would call for a tighter monetary stance. But price increases were low and the available statistics, on capacity utilisation and the labour market, for example, did not point to a rapid future increase in inflation. The Board’s majority therefore considered that an immediate tightening was not needed. With inflation expectations firmly anchored around the 2% target, we judged there was scope for waiting with an interest rate increase. Calmer monetary policy discussion Some of the earlier autumn conferences were preceded by monetary policy discussions that were rather intensive. In that respect the past year has been relatively calm, even though the situation has changed so rapidly. Last autumn there was, of course, considerable anxiety but the Riksbank’s quick succession of interest rate cuts was well received. In Sweden, moreover, we were spared most of the European discussion about political pressure on monetary policy.

Structural shifts are also taking place at the national level in most of the emerging economies. These include the demographic shifts which are transforming the workforce. The demographic structure has an increasing component that comprises a young population and a growing middle income segment. This trend is exemplified by consumers that have become more discerning, with higher expectations. This is also reinforced by increased longevity. The workforce is also progressively affected by the growing urbanisation which is becoming an important feature in most emerging economies. The international, regional and national financial landscape also continues to be significantly transformed. At the international level a growing number of new financial centres will emerge. BIS central bankers’ speeches  1  There will also possibly be new international reserve currencies and a greater network of financial institutions that originate from an increasing number of emerging economies from different parts of the world. This will facilitate greater inter-linkages between financial systems, especially among the emerging economies. These evolving developments will result in an increased interconnectedness of financial markets with the consequence of increased contagion and interdependence. Increasingly financial systems have also become prone to crisis. The recent global financial crisis has prompted the international community to respond with wide-ranging fundamental reforms that is also transforming the international financial system. At the regional level, the Asian region has become more cohesive with regional financial integration intensifying to facilitate a more efficient allocation of financial resources in our region.