the expectations i spoke about earlier, we end up with a negative self - reinforcing effect which means we then need to fight much harder to meet the inflation target. this would mean that it would be even longer before the repo rate could rise to a more normal level. there is also reason to ask how much higher the critics think the repo rate should be. should it be at 0, 1 or perhaps 2 per cent? the impression one gets is that the repo rate is assumed to be the main tool for relieving the problem of rising debt and housing prices. however, for this to be possible a repo rate considerably higher than the one we have today would likely be required. and the more the swedish interest rate exceeds international rates, the more inflation and growth will be dampened, in part via the usual interest rate channel and in part via a stronger krona in the way i have just described. this in turn means a greater risk that inflation will remain below the target and that inflation expectations will become stuck at a level that is too low. a discussion of these kinds of central considerations is typically missing from the criticism put forward. in the international discussion, the central banks ’ policy rates are currently seen as quite blunt tools when it comes to curbing the rise in household debt and housing prices. the reason for this is that the interest rate cannot be targeted at the problem area in question, but has a much broader impact on the economy, such as companies ’ investments and, via exchange rate effects, their export opportunities. 11 it does not come as much of a surprise therefore that no central bank has so far used the interest rate weapon to any great extent for this purpose. there is currently a relatively high level of agreement that macroprudential policy and well - designed financial regulation should be the first line of defence in preventing financial imbalances from accumulating. 12 the tolerance band was not a target range as i mentioned, one proposal has been that the tolerance band for the inflation target should be reintroduced, as it is assumed this would make it easier for the riksbank to raise the repo the broad impact of the interest rate is occasionally highlighted as an advantage, however. unlike macroprudential policy measures which can sometimes be circumvented, “ the interest rate gets into all the cracks ” ( stein, 2013 ). see imf ( 2015 ). bis central bankers ’ speeches rate. it could be helpful to remind ourselves here

what was hoped for and i am not aware of any country where making the central bank more independent has been regretted. conclusion let me round off. i began by saying that the state bank of vietnam is currently in a situation similar to that of the swedish riksbank just over a decade ago. however, it is also the case that the conditions are different in certain respects. one difference is that the swedish credit and money markets had been deregulated completely during the 1980s and early 1990s. this meant, for instance, that the central government issued bonds, through public auctions and at predetermined times, and actively attempted to promote the development of a secondary market. thus, there was already a clear channel through which monetary policy could have an effect. another difference was that we in sweden had the support of a long tradition of comprehensive production of public statistics that made our work easier. these are factors that, as i understand it, do not apply to the same extent here in vietnam, at least not yet. vietnam has thus – like all countries – its own special conditions that may need to be taken into account and may make it difficult to formulate monetary policy as an exact blueprint of the system in for a detailed discussion of “ central bank transparency ”, see, for instance, chapter 1 of blinder, a. s., ( 2004 ), the quiet revolution – central banking goes modern, yale university press. another country 8. however, i would like to say nevertheless that the principles which guide monetary policy in modern central banks, and which i have described here, are so general that they should be able to act as guiding stars for monetary policy reform work anywhere in the world. essentially it is a question of giving the central bank carefully specified – and realistic – objectives, granting it independence in its endeavours to meet the objectives and ensuring that it carries out its work in a transparent manner and is accountable for its actions. it is my conviction that reforms based on these principles will be beneficial to vietnam, too. thank you. it can be noted, for instance, that camen, u. and h. genberg, ( 2005 ), ” an inflation targeting regime for vietnam ”, paper prepared for the vercon first annual conference, hanoi, may 24, draw the conclusion that the conditions for introducing ” full fledged inflation targeting ” have not yet been fulfilled in vietnam.