become increasingly present in the banking sector in recent decades. this does not mean that we can rest ; banks are not immune from any of the factors that i have just described. indeed, if we were to look closely at bank failures large and small over the years, i believe we would find that poor corporate governance lay at the heart of many of these failures. why should we have higher expectations for the governance of banks than we have for other firms? fundamentally, because banks must act in a way that promotes “ confidence ” to the public and the markets in general and, more specifically, to their primary stakeholders. banks play a crucial role in the flow of capital within an economy and are charged with a special public trust to safeguard customers ’ wealth. a stable and healthy banking system is critical to the long - term growth of an economy. banking supervisors have long recognised the importance of good governance ; supervision can not function properly if sound corporate governance is not in place. experience underscores the need to have appropriate levels of accountability as well as sufficient checks and balances. for banking supervisors, although the range of topics that corporate governance may encompass is quite wide, the focus is mainly on those elements that relate to the manner in which the business and affairs of an organization are governed by its board and managers. this means the decision - making process within the bank, the respective responsibilities and accountabilities of the board and managers, the control functions that provide assurance to the monitoring processes and the structures that support all these functions. good corporate governance and supervisory actions complement one another. the guidance, inspections and oversight activities of supervisors cannot guarantee, on their own, the prudent operation and financial soundness of a supervised bank. banking supervisors must rely on the competence, skills and prudence of the board and management. confidence in the corporate governance processes at the bank will enhance the supervisor ’ s overall confidence that the bank is being operated prudently. this may be reflected in the intensity of supervision applied. in addition, supervisors may expect a bank ’ s governance structure to be proportionate to its size and complexity regardless of the relevant general legal requirements. from the perspective of a prudential supervisor, the basic elements of a good corporate governance framework could include the following : - the primary responsibility for the conduct of the bank ’ s business lies with its board and management. indeed, it is difficult to conceive that a bank could carry out activities in the absence of strategic objectives or guiding corporate values.

##o rate and to take into consideration the repo rate expectations reflected at that moment by pricing on the financial markets. however, speaking for myself, i have always seen the repo rate path as a component of our ambition to be transparent as it shows which repo rate we include in our forecasts. and we always emphasise that the repo rate path itself is a forecast and not a promise. one important source of the difficulties that goodfriend and king point out is the unclear allocation of roles, responsibilities and instruments for managing the work of financial stability and macroprudential policy in sweden. as i have already mentioned, i consider sorting this matter out to be a matter of great urgency, considering that sweden has one of europe ’ s largest banking systems in relation to gdp. goodfriend, m. and king, m., “ an assessment of swedish monetary policy 2010 – 2015 ”, riksdag committee on finance, sveriges riksdag, 2016. “ time to improve the inflation target? ”, published 3 december 2015. bis central bankers ’ speeches this spring, goodfriend and king ’ s assessment will provide an excellent basis for the discussion of monetary policy and the issues that a modern central bank must manage. these unusual times are placing great demands on both monetary policy and macroprudential policy. it is important that we are able to meet these challenges in the right way. bis central bankers ’ speeches figure 1. inflation targeting has made inflation lower, more stable and more predictable. note. annual percentage change. sources : statistics sweden and the riksbank figure 2. average mortgage rate and corporate rate, and repo rate note. mfis ’ lending to households for housing purposes and to non - financial companies, new loans and agreements, refers to monthly data. repo rate refers to daily data and date of implementation. sources : statistics sweden and the riksbank bis central bankers ’ speeches figure 3. inflation expectations note. per cent. money market agents. source : tns sifo prospera figure 4. the development of the repo rate note. per cent. outcomes are daily rates and the forecasts refer to quarterly averages. source : the riksbank bis central bankers ’ speeches figure 5. bond purchases 80 – 90 february march april policy meeting july october 40 – 50 note. sek billion. government bond purchases will continue until the end of june 2016. source : the riksbank figure