The new act was also needed to adapt the Riksbank’s activities to the requirements ensuing from Sweden’s membership of the EU. 8 How was the increased independence felt by the Riksbank? When one talks about central bank independence, one usually distinguishes between goal independence and instrument independence. This may sound cryptic, but goal independence means that the central bank determines its own operational target, which is to be attained to meet the legislator’s intention of price stability, for instance an inflation rate of 2 per cent. Instrument independence means 3 See Jonung et al. (2003). As early as in 1931-1937, the Riksbank was the first central bank in the world to have a price stability objective. After that, however, followed a period of 50 years with various fixed exchange-rate regimes. 5 See, for instance, the classical articles by Kydland and Prescott (1977), Barro and Gordon (1983) and Rogoff (1985). For more descriptive and explanatory reviews, see Apel and Viotti (1998) and Heikensten (2005). 6 A classical article on this subject is the one by Alesina and Summers (1993). 7 See, for instance, Fischer (2015) and Bernanke (2017). 8 The requirement for independent central banks follows on from Article 130 of the Treaty on the Functioning of the European Union and applies to all EU member states. The motives behind the EU legislation were in turn based on academic research and the experiences of ‘The Great Inflation’, the period when inflation rose in many parts of the world during the 1970s.

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