policy preparations and decisions, and a new interest rate management system for monetary policy has been launched. the endeavour to promote transparency is evident in the riksbank ’ s participation in public hearings by parliamentary committees, in inflation reports, speeches, discussions and seminars of various kinds, and in the publication of specialist reports. this has led, i believe, to a better awareness — among market agents as well as a wider public — of how monetary policy works. one indication of this is that agents ’ expectations about monetary policy have become increasingly congruent with the riksbank ’ s monetary policy intentions. in addition, the five - party agreement on the new riksbank act is a manifestation of broad political support for the low - inflation policy. it is our ambition, moreover, to continue the process for increased transparency as far as is reasonable and feasible. criticism of monetary policy monetary policy has, of course, come in for some criticism. a common issue initially was whether striving for 2 per cent inflation was reasonable and feasible. that discussion seems to have dried up. inflation is currently around 2 per cent and more and more people understand the advantages of this. another question has been why the riksbank does not have the task of promoting other objectives, growth, for example. here, too, there is a growing awareness, though it does not include everyone. in the long run monetary policy is only capable of influencing inflation and there is absolutely no long - term trade - off between inflation and growth. if anything, high inflation tends to impair real economic development. in the short run, however, the situation is somewhat different. in this perspective, inflation and growth are largely two sides of the same coin, at least as long as inflation expectations are stable around the target. weaker growth implies a diminishing risk of inflationary impulses from demand, which normally warrants a less restrictive monetary stance. conversely, demand that is excessively strong in relation to potential output implies a risk of rising inflation and a need to raise the repo rate. the current discussion seems to be about whether the riksbank acts symmetrically. in other words, is the riksbank as concerned about under - shooting the inflation target as it is about preventing inflation from exceeding the target? my answer to that question is definitely “ yes ”. the riksbank aims to keep the rate of inflation at 2 per cent, neither more nor less. the issue of monetary policy asymmetry seems to be linked

in the long term, this reinforces the riksbank ’ s credibility and legitimacy. how do we work with financial stability? as i said earlier, the sveriges riksbank act states that we shall also promote a safe and efficient payment system. in other words, we are to safeguard financial stability. the riksbank was the first central bank to publish a report containing a coherent analysis of financial stability in 1997, and we have published these reports twice a year since then. other countries were more hesitant in speaking openly about the stability of the financial system. some considered it impossible to be open on such issues if a crisis were to occur, while the riksbank ’ s attitude was that openness also benefits financial stability. by discussing risks and vulnerabilities at an early stage, crises could be avoided. in addition, we had positive experiences of openness in the price stability field. it appears as though our method of working with financial stability has set a good example. today around thirty countries have followed. recurring financial crises have made it clear that there will always be problems that need to be tackled and that the authorities can therefore benefit from a structured approach to financial stability. what can the riksbank do if it considers that financial stability is threatened? there is no direct steering instrument or lever to pull in the same way as for price stability. moreover, the riksbank cannot intervene in the banks ’ operations at a microeconomic level. the work is instead largely concerned with preventing crises. this is achieved partly by regulations that establish the framework within which financial companies can operate, and partly by regular monitoring of the system. there must also be an emergency system so the central government can manage any crises that may nevertheless arise. with regard to the first part of the stability work, the responsibility for regulations in the financial markets lies mainly with the ministry of finance and finansinspektionen ( the swedish financial supervisory authority ). however, the riksbank can affect financial market legislation by responding to consultation documents, participating in commissions of inquiry and in the international work on developing regulations. on the basis of my own earlier experiences of the management of bank crises in different countries, i consider it particularly important to complete the swedish legislatory work on how banks in distress should be managed. it is surprising that this issue is still outstanding, despite the fact that it is more than ten years since the bank crisis occurred and despite a draft bill being taken up for consultation five years ago.