given to a number of authorities, with the central bank playing the leading role, expressed for instance in the form of a chairmanship or right of veto, as in the case of germany. if the council ’ s solution is chosen, the council normally also confers the right of making recommendations regarding macroprudential measures. i think it would be good if we introduced a structure for macroprudential policy that does not differ too much from those being introduced in other eu countries, as the financial markets are strongly integrated and a similar structure for macroprudential policy within the eu would here i am giving my personal views on the financial crisis committee ’ s proposal. the riksbank will present a consultation response later in the spring containing more detailed views and comments. bis central bankers ’ speeches facilitate international cooperation. the need for international cooperation is based on the fact that measures introduced, or not introduced, on one country can often have consequences for the financial stability of other countries. as i mentioned earlier, it is extremely important to create a clear mandate and efficient tools for macroprudential policy in sweden. i would like to have seen the financial crisis committee present a proposal that provided a more active structure, and which was closer to the esrb ’ s recommendation. 14 for instance, it will probably often be unclear who should react to a risk that has arisen, and it will therefore also be difficult to hold an authority accountable for what it has done or failed to do. however, i am glad that the financial crisis committee has now presented its proposal, as it provides an important contribution to the discussion on how macroprudential policy should be developed and organised in sweden. efficient macroprudential policy increases the riksbank ’ s possibilities to carry out its main tasks let me summarise by emphasising my most important message today. monetary policy has to some extent also given consideration to the risks arising from household debt, in addition to inflation and resource utilisation. we are eager to avoid the unpleasant developments in a number of countries in recent years. at the same time, i believe that there are several macroprudential policy tools that could be more efficient than the repo rate in preventing financial imbalances. so far, there is no framework for macroprudential policy in sweden, and this needs to be remedied as soon as possible. in my opinion, there are good reasons why the riksbank should play a major role in macroprude

theory. the course of economic events in connection with the crisis of 1930 – 33 partly resembled what had happened in sweden a decade earlier. an international boom with unduly high hopes of future profits had led to markedly inflated asset prices. the party ended in a financial crash and wall street ’ s collapse in october 1929. a number of banks had to close their doors. on top of all this, the us federal reserve imposed credit restrictions. in sweden, the depression was not as deep as the one in the early 1920s, though unemployment did rise to much the same level, about 25 per cent. the major difference was that the economy was successfully piloted past a steep price fall. sweden left the gold standard in september 1931. the finance minister, felix hamrin, declared that monetary policy ’ s objective would be to “ use all the available instruments to maintain the swedish krona ’ s domestic purchasing power ”. deflation was to be combated just as vigorously as inflation. so the riksbank seems to have been the world ’ s first central bank to base its policy on price stability. our work today with an inflation target is accordingly set in a proud tradition. when sweden came off the gold standard the krona rapidly depreciated by about 30 per cent. export producers found this particularly welcome as it immediately improved their competitive position. the increased unemployment in the early 1930s elicited a debate about economic policy. ernst wigforss, the social democrat finance minister, saw unemployment as a function of insufficient purchasing power in the economy. to rectify this, he proposed public work projects with market wages, financed with short - term government borrowing. this was a departure from the earlier concentration on monetary policy as perhaps the only effective instrument for stabilisation policy. wigforss ’ proposal also differed from the previous policy of keeping unemployment benefits at a low level so as not to compete with regular wages. another innovation was the focus on domestic demand instead of on a need to stimulate employment by adjusting prices and wages. the new direction of policy was nurtured with ideas from the stockholm school of economics, which included erik lindahl, bertil olin, gunnar myrdal and erik lundberg. their ideas had been developed concurrently with those of john maynard keynes. the notion that government ought to intervene in a market economy in order to rectify imbalances permeated economic policy for many years. diminishing confidence in the new approach keynesianism and its analytical methods spread rapidly