The ESRB recommends that macroprudential responsibility should lie with one institution or one council and that this body should have control over suitable tools to attain its objectives. This is to establish a clear responsibility. Moreover, they recommend that the central banks should play a leading role in macroprudential policy and that the macroprudential supervisory body should have operational independence. It is now time for me to return to the Financial Crisis Committee’s proposal, and how this relates to the demands I consider should be made regarding a framework for macroprudential policy – demands that are also expressed in the ESRB’s recommendation. …but the Financial Crisis Committee’s proposal does not go very far… Two days ago, 23 January, the Financial Crisis Committee published its proposal as to how we should organise macroprudential policy in Sweden.13 In principle, the proposal is that the current council for cooperation on macroprudential policy between the Riksbank and Finansinspektionen is confirmed by law and supplemented with independent experts and an observer from the Ministry of Finance. The council shall work to promote greater knowledge of systemic risks and to develop macroprudential tools. Moreover, it shall analyse risks and discuss suitable measures. A secretariat for the council will be established at the Riksbank. However, the council will not have any powers of authority; its work will consist of exchanging information and discussion. Decisions on the application of macroprudential tools will lie with Finansinspektionen or the Riksbank, with both being given responsibility for macroprudential policy.

The basis for this was the Bank’s task of promoting a safe and efficient payment system – what we in practice define as financial stability.10 In 1997 the Riksbank began publishing its assessment of the stability of the financial system, in the form of the Financial Stability Report, published twice a year. It was one of the first central banks in the world to do this. The special Macroprudential Policy Division at the Riksbank’s Financial Stability Department has as one of its tasks to assess the need for specific macroprudential policy measures. The Riksbank’s Monetary Policy Department has long conducted macroeconomic analysis to provide a good guidance for interest-rate decisions, which are based on macroeconomic analyses and forecasts. The analysis of financial stability, combined with the monetary policy analysis, provides good grounds for understanding the repercussions between the financial and real economy, which is essential for successful macroprudential policy. In recent years the cooperation between the Financial Stability and Monetary Policy Departments at the Riksbank has intensified. There are also clear links between monetary policy and macroprudential policy. Both policy areas ultimately aim for a stable macroeconomic development – macroprudential policy by limiting systemic risk and monetary policy by keeping inflation low and stable and stabilising the real economy. But they also affect the conditions for one another (see Figure 10). 9  Sveriges Riksbank (2012), Financial Stability Report 2012:2.