Lars Nyberg: Monetary and financial stability from a central bank perspective Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the conference on the 10th Anniversary of the Central Bank of Bosnia and Herzegovina, Sarajevo, 13 September 2007. *  *  *  Ladies and Gentlemen, What is the interaction of monetary and financial stability? This is one of the most discussed issues in central banks and academia today, and is likely to remain high on the agenda for the foreseeable future. Many central banks, including the Swedish Riksbank, now have dual tasks: maintaining price stability and promoting financial stability. I will begin by discussing these tasks separately, and then turn to the questions the success in bringing down inflation has raised with regard to financial stability, and how this has influenced the conduct of monetary policy in Sweden. Before proceeding, I should stress that the views I am about to express are my own, and do not necessarily reflect those of the other members of the Executive Board of the Riksbank. Moreover, it should be kept in mind that my remarks primarily are based on my own experiences from an inflation targeting central bank, operating in a small open economy. Price stability The taming of inflation, after the destructive price-wage spirals of the 1970s and 1980s, is one of the major success stories in modern economic policy making. Economic theory tells us that high inflation is bad for a number of reasons. These theories now appear to have been vindicated.

As the data to be collected and metrics that are relevant for each sector can differ greatly, there will be a need to take a sectoral approach to this. For example, an asset manager looking to invest in the agriculture sector will not find raw data such as temperature and rainfall levels, proximity of the farmland to conservation areas, or the education levels of the farm owners meaningful. These must be converted into an accurate assessment of the environmental and credit risks of the agricultural assets so that the asset manager can adjust its investment decisions accordingly. The financial sector has an important role to play in determining these frameworks, to ensure that capital is channelled effectively towards sustainable business practices. MAS is keen to work with the industry, academia and international organisations to develop these sector-specific frameworks, for example, for maritime, agriculture, logistics, and others. As an international financial centre, Singapore is committed to channelling financial flows towards sustainability and transition efforts in Asia and globally. We are developing green finance solutions and markets that can support a sustainable economy. We are strengthening the financial sector’s resilience to environmental risks through providing guidelines on environmental risk management and stepping up disclosure expectations. We are working closely with the private sector to develop a taxonomy prioritising transition activities. We are actively exploring how technology and innovation can be leveraged to drive the financial sector’s sustainability agenda. We must harness technology and data to drive effective climate action.