Immediately after the inflation target was introduced in 1993 the Riksbank’s rhetoric and probably the actual policy were most strongly focussed on the development of inflation. The underlying factor behind this was probably concern over credibility problems. However, from the mid-1990s stabilisation of the real economy has increased in scope and the Riksbank has in various ways made clear that we give consideration to developments in the real economy. This was, for instance, one of the main points in the brochure "Monetary Policy in Sweden”, which we published in May 5 . 3  See Lars Heikensten’s speech, ”Thoughts on how to develop the Riksbank’s monetary policy work”, at the Swedish Economics Association on 22 February 2005. 4  See, for example, Apel, M. et al, (1999), ”Different ways of conducting inflation targeting – theory and practice”, Sveriges Riksbank Quarterly Review, 1999:4, 13-42, Svensson, L. (1997), ”Inflation forecast targeting: Implementing and monitoring inflation targets”, European Economic Review, 41, 1111-1146, and Batini, N., and E. Nelson, (2001), ”Optimal horizons for inflation targeting”, Journal of Economic Dynamics & Control, 25, 891-910. 5  See footnote 2 for details. ”Monetary Policy in Sweden” replaces the clarification of monetary policy published in 1999, see Heikensten, L. (1999), ”The Riksbank’s inflation target – clarifications and evaluation”, Sveriges Riksbank Quarterly Review, 1999:1, 5-17. 4  BIS Review 111/2006  In this context, let me also mention something about risks. More specifically, the risks connected to rising asset prices and credit expansions.

A stronger U.S. banking system better protects against future shocks, provides a more solid foundation for domestic growth, and therefore also enhances prospects for growth and financial stability abroad. I look forward to a discussion with fellow panelists and also to engaging with conference participants over the next two days. Thank you for your attention. References Ehrmann, M. & M. Fratzscher (2005). Equal Size, Equal Role? Interest Rate Interdependence Between the Euro Area and the United States, Royal Economic Society, vol. 115 (506), pages 928–948, October. Farhi, E. and I. Werning (2014). Dilemma not Trilemma? Capital Controls and Exchange Rates with Volatile Capital Flows, IMF Economic Review, pp. 62: 569–605. Federal Open Market Committee (2016), Statement on Longer-Run Goals and Monetary Policy Strategy, Adopted effective January 24, 2012; as amended effective January 26, 2016. Federal Open Market Committee (2016), Policy Statement, January 27, 2016. Fleming, M. (1962). Domestic Financial Policies under Fixed and under Floating Exchange Rates, IMF staff papers, 9 (3), pp. 369–380. G20 (2010), Summit Leaders’ Declaration, Seoul, Korea, November 11 – 12, 2010. Goldberg, L. (2013). Banking Globalization, Transmission, and Monetary Policy Autonomy, Sveriges Riksbank Economic Review (Special Issue), pp. 161–193. 7  http://www.federalreserve.gov/aboutthefed/section2a.htm. BIS central bankers’ speeches  3  IMF (2105), The IMF’s Approach to Capital Account Liberalization Revisiting the 2005 IEO Evaluation, Independent Evaluation Office, Washington, D.C. IMF (2015), 2015 Spillover Report, Washington, D.C. IMF (2012), The Liberalization and Management of Capital Flows: an Institutional View, Washington, D.C. Klein, M. and Shambaugh, J. (2015).