solutions as regards the allocation of responsibility. one common feature is for the central bank frequently to have a certain responsibility for financial stability via its role as lender of last resort. in certain countries, the central bank also has responsibility for supervision and the application of regulations. meanwhile, in other countries, such as sweden, responsibility for regulatory and supervisory matters is placed with a separate supervisory authority. this means that, in sweden, it is the riksbank that controls the policy rate and the swedish financial supervisory authority, finansinspektionen, that controls regulations. for some time, a discussion has taken place on the international level regarding the role central banks should play in matters of supervision and the application of rules. ideas regarding the application of more time - varying regulations are adding fresh fuel to this debate. utilising the expression for the rule of action above in the equation for the lending rate allows different institutional arrangements to be illustrated. in the previous equation for the lending rate, the regulations were described as a time - varying variable. however, with a rule of action, the application of regulations itself becomes a function of a number of variables that vary over time : itlending it t ( z ( z, lt, yt,... ) ). various institutional arrangements can be imagined, based on the distribution of responsibility for assessing the variables in the function, determining rules of action or functional form and, finally, for translating the function into actual regulations. the latter would probably require an element of discretionary decision - making. one possibility would be for the central bank to determine the policy rate ( it ) and for the supervisory authority to determine regulations, that is to say both z and z (... ), as is the case in sweden. another possibility would be for the central bank not only to determine the policy rate, but also to determine the time - varying regulations through taking responsibility for the application of the rule of action ( z (... ) ), while the actual implementation of the non - time variable regulations ( z ) would be the responsibility of the supervisory authority. a variation of this would be for the central bank to be completely responsible for the implementation of the time - varying regulations. finally, there is the possibility of the central bank taking responsibility for all regulation and supervision. at present, it is still too early to say whether the international debate will conclude that one form of organisation is better than any other. nonetheless, regardless of the form of institutional

cecilia skingsley : experience with macroprudential policies summary of a speech by ms cecilia skingsley, deputy governor of the sveriges riksbank, at a workshop arranged by the committee on the global financial system, bis, held at the hong kong monetary authority, hong kong, 10 august 2015. * * * since the global financial crisis, several countries have started implementing macroprudential policies. this workshop has provided us with the opportunity to deepen our knowledge regarding how different countries choose, calibrate and implement different kinds of macroprudential instrument. we have also gained a greater understanding of the efficiency of these instruments, as well as of how different countries incorporate macroprudential settings in the calibration of monetary policy. although we have come a long way the past few years as regards setting up institutional frameworks and developing tools, macroprudential policy is still a relatively new policy field in many countries and there are many important issues that need to be addressed. i would like to elaborate on three of these issues. the first is the challenge of determining the proper mix of policy instruments and the right balance between them, and deciding how fast and resolute our actions should be when imbalances are building up. for example, on the one hand, we know from international experience that credit growth can be difficult to curb once it starts accelerating. this would speak in favour of prompt and strong measures. but, on the other hand, since we only have limited experience of macroprudential instruments, a step - by - step approach may seem more attractive. furthermore, even if the first best solution would be bold steps, it may be more difficult to gain consensus for these. i think it would be better and more reasonable to take a number of small steps in order to avoid inaction bias and a standstill in reforms. taking sweden as an example : in its biannual financial stability report, the riksbank outlines several alternatives for how the growing risks associated with increasing household debt may be managed. the second issue that needs to be addressed is how macroprudential policy should interact with other policy areas when it comes to tackling systemic risk. my view is that monetary policy could take systemic risk into consideration under the precondition that this doesn ’ t conflict with the objects of monetary policy. that is, if the object of monetary policy is inflation targeting, monetary policy may very well serve as a line of defence if inflation is not