mr backstrom discusses the monetary policy situation in sweden speech by the governor of the bank of sweden, mr urban backstrom, at stockholm chamber of commerce and veckans affarer on 2 / 2 / 99. thank you for the invitation to attend this conference and talk about “ the krona and the interest rate ”. i shall be speaking mainly about the current monetary policy situation and the factors that may be crucial for the policy ’ s future formulation. however, now that the riksbank is directed by the six members of the new executive board, which also makes the monetary policy decisions, the decision - making process has changed. so i shall begin by briefly describing how monetary policy will be decided and presented in this new environment. the new process for monetary policy decisions at 1pm on thursday 11 february, the new executive board of the riksbank will be convening for its first meeting specifically devoted to monetary policy. compared with the board ’ s ordinary sessions, the discussion at what are called monetary policy meetings is to cover monetary policy more comprehensively and conclude with a decision on the policy ’ s future stance. the discussion will be minuted and published in this form on 6april, around eight weeks after the event. moreover, a brief account of the grounds for the decision will be presented in a communique on the day after the meeting, in this case at 9. 30am on friday 12 february. these monetary policy meetings will be held 8 – 10 times a year and the minutes will be published with a time lag of 6 – 8 weeks. monetary policy matters may, of course, appear on the agenda in the intervals between these meetings, particularly as repo rate decisions are normally made once a fortnight and announced for the coming two weeks. in the normal course of events, however, it is envisaged that repo rate decisions will be based on the discussions at monetary policy meetings. so it is only under special circumstances that monetary policy will need to be discussed more comprehensively in between the meetings specifically reserved for this. for the riksbank, this is a new procedure. the time when decisions will be announced is also new. in future, monetary policy decisions will be published on fridays at 9. 30am, though there may be exceptions to this rule in certain cases, such as the publication of the inflation report. judging from their newsletters, it seems to me that so far most market players have understood our new arrangements. that is

foreign exchange banks in the world are taking part in this project, with the aim that a joint system will settle all of the members ’ foreign exchange transactions. this will enable payment in one currency to be made directly against payment in another, which will entail the credit risk that arose earlier disappearing. it in a broad sense has, of course, also been necessary for the security of the systems for large payments that central banks around the world develop or oversee, where the trend in recent years has been towards real time gross settlement. our own rix system is an rtgs system, as is the target system used by the ecb. i would be happy to discuss this, but it would involve a deviation from my subject here. conclusion in conclusion, i would like to make two reflections. firstly, it is of course the case that it, while increasing both the efficiency and security of the financial system in general and the payment system in particular, also increases risks of a purely operational nature. operational risks were strongly in focus prior to the new millennium, particularly in the financial sector, and extensive preparations were made to guard against them. with hindsight, it is easy to talk about making a mountain out of a molehill, but the lack of problems was of course largely due to the fact that they had been foreseen and due precautions taken. one positive consequence of all the fuss around the new millennium was that openness regarding security and it was increased and that attention was drawn to the need for routines to manage crises. at the same time, it can also be concluded that the it systems proved to be fairly robust. the consequences of the terrorist attacks in the usa on 11 september last year could actually be handled to a large extent as there were security arrangements for most of the central financial systems. however, these events emphasised the importance of taking into account such potential threats as terrorism and other physical threats to the financial system when establishing security routines. my second reflection is of a more human nature. after having given a whole speech on it in the financial sector it is easy to give the impression that the banks and other institutions operating on the financial markets consist merely of technology and money. that is not the case. fundamentally they are not about technology or money, but about people and the relations between people. all successful managers of financial companies, particularly bank managers, are aware of this. technology is a useful aid, but a customer who does not receive a respectful, personal and competent reception at one bank