in the demand for goods and services in the economy. and this requires completely different measures than those of monetary policy. these measures must influence the functioning of the labour market and create a beneficial environment for new businesses and corporate sector growth. of course, this does not prevent the riksbank from contributing as far as possible to other economic policy targets being attained ; this is quite in line with the preparatory works to the sveriges riksbank act. the condition for this is that our own target of a low and stable inflation rate is not jeopardised. the fact is that developments in recent years show that the task of ensuring inflation remains in line with our target is hard enough. there have been repeated structural changes that have been difficult to parry completely with interest rate adjustments. it is rarely possible to forecast structural changes well in advance, much less to estimate their quantitative effects on inflation. they can therefore often lead to inflation deviating from the target level. as i mentioned earlier, over the past ten years there have been a number of changes of a structural nature that have almost all contributed to holding back inflation. 3 / 7 when the riksbank uses changes in its key rate to affect inflation, this is mainly by way of influencing aggregate demand. to put it simply, we usually put the brakes on when economic activity is rising and we accelerate when it is falling. inflation targeting should thereby often be able to contribute to smoothing the business cycle. it is also possible that it can reduce fluctuations in unemployment. however, it is not reasonable to believe that the fluctuations in economic activity can be eliminated entirely. it is therefore seriously misleading to make the riksbank responsible for the difference between actual unemployment and what could potentially have been attained if it had been possible to abolish fluctuations in economic activity. what we can hope for is a slightly more stable development, which we appear to have attained over the past ten years, although it is too early to draw any completely certain conclusions. the policy is flexible another question which arises in the discussion now and then is how mechanical or how flexible the policy should be and how it should then be assessed. the riksbank currently conducts what is known as flexible inflation targeting. we are definitely not what my british colleague mervyn king would call “ inflation nutters ”. the focus lies not merely on stabilising inflation under any circumstances ; as long as there is fundamental confidence in the policy, that we will have low inflation in line with our target, we also

conforming to normal financial practice. therefore, excessive rates will invite supervisory scrutiny. during our onsite examinations last year, we identified instances of unfair practices in charging of interest by many entities. these include charging interest from the date of loan sanction or agreement execution rather than from actual disbursement of the loan, charging interest from the date of the cheque for loans disbursed through cheques, despite handing over the cheque to customers much later, and levying interest for the entire month instead of the period for which the loan was actually outstanding. additionally, some nbfcs collected advance instalments but calculated interest based on the full loan amount. wherever such practices came to light, rbi has initiated action including directing these supervised entities to refund such excess charges. however, as heads of assurance functions, it is incumbent upon each of you to serve as custodians of conscience within your respective organizations and ensure that there are no such unfair practices prevalent in your entities which may be detrimental to your customers. importance of meaningful assurance assurance endeavours, especially internal audit and compliance should transcend mere box - ticking exercises and delve into addressing root causes of the issue. by going beyond surface - level checks, assurance functions can uncover the fundamental factors contributing to problems, allowing for more effective and sustainable solutions to be implemented. this proactive approach not only helps mitigate risks but also enhances organizational resilience and fosters a culture of continuous improvement. we have also observed that there are some misguided or intelligent interpretation in the market to circumvent regulations, which poses a significant threat to the integrity of the financial system. when individuals or regulated entities start interpreting regulations to their advantage or for their gain, it undermines the effectiveness of regulatory frameworks and compromises the stability and fairness of the market. such practices erode trust and confidence in the financial sector, potentially exposing consumers, investors and the broader economy to risks and vulnerabilities. rbi's supervision will review the substance of such transactions over their legal form. should we encounter instances of such circumvention of regulations, we will not hesitate to initiate appropriate supervisory action, as has been demonstrated in some of our recent actions. conclusion 4 / 5 bis - central bankers'speeches before i conclude, i would like to highlight the importance of assurance functionaries keeping themselves abreast of all the latest developments. in the rapidly evolving landscape of finance and regulation, new challenges, risks