· inflation in bh is relatively low and stable ; · km use has risen rapidly within bh and it is now the dominant transactions currency in all parts of the country. our km liabilities have risen from km 132 million when we started in august 1997 to km 1, 023 million at the end of february 2001 ; · they can even be traded in a number of other countries in europe ; · the km has remained fully convertible. since the km currency was introduced we have issued around km 3. 44 billion and we have converted back to dem around km 2. 66 billion. i do not think there is any other type of monetary policy, except the adoption of the dem as the currency of bh, that could have given a country like bh a stable and trusted currency this quickly. why has the currency board worked in bih? i think there are four main reasons : · first, people have faced many financial traumas. they therefore value a stable currency. the currency board consequently has a high level of public and political support within bh ; · second, people had complete trust in the anchor currency, the dm a strict currency board has allowed the cbbh, a new institution with no track record, to gain some of the credibility of the dem and the bundesbank ; · third, some people say it is because the cbbh has a foreign governor. i think that is only a small part of the reason. · in my view, the major reason it has worked is the very good legal and institutional framework the cbbh has. – the goal of the cbbh is simple, clear and specified in the law ; – the law limits our activities where there would be any potential conflict with the currency board requirements ; – within these statutory goals and limitations, the cbbh is independent of political direction ; – we have sensible and sound internal decision - making processes ; – we are easily and firmly held accountable. a breach of the currency board requirements would be quickly obvious to all. within the current economic jargon, it is a very transparent form of policy implementation. some economists and others argue that a currency board has disadvantages because of the limitations it places on the economic roles of the cbbh for example : · the cbbh can not play a role in providing liquidity to the banking sector ( i. e., it can not act as lender of last resort ) ; · the cbbh can not finance the government ; · the cbbh can not play

on equality. this effect is not easy to calculate, but it is an important channel. • when attaining an inflation target, this normally goes hand in hand with an economy avoiding too much of booms and busts in the business cycle and less swings in unemployment. less uncertainty over economic developments and economic policy is good for investment, and hence for growth and labour market outcomes. so, labour market developments are important for income equality. • in recent years, in order to meet their price stability targets, many central banks have pursued a very expansionary policy, including low or even negative policy rates, as well as purchase programmes of securities. these policies have attracted criticism, saying they increase inequality, but i disagree. • given the weak trend in growth in many countries, a less expansionary monetary policy than pursued during recent years would have led to higher unemployment than was the case. in that sense, monetary policy could be argued to have contributed to lower income inequalities, as unemployment could lead to large negative effects on household income. many of those households, who would have experienced unemployment, would then have fallen to lower income deciles, contributing to higher income dispersion. most studies that include the labour market effect come to the conclusion that the overall effect of expansionary monetary see deutsche bundesbank ( 2016 ). 2 see deutsche bundesbank ( 2016 ). 2 policy on inequality is that it slightly decreases it. or in short, the dampening effect of lower unemployment offsets the effects from higher share prices. but the overall effect seems, if any, to be small. • to sum up, the very expansionary monetary policy conducted during recent years in some countries could be argued to have had a positive net effect, albeit small, on equality. the positive employment effect normally seems to dominate over the negative effects 3. • we at the riksbank don ’ t per se take equality into consideration when taking monetary policy decisions. it is not part of our mandate. this is more effectively done by fiscal policy. i don ’ t believe any other central bank specifically takes this into account either. • but going forward, the swedish parliamentary committee on finance has asked the riksbank to evaluate the distributional effects of the expansionary monetary policy in recent years. so this is an area we are working on now and will continue to do so. • as the theme of this conference is “ reshaping globalisation ” i would like to end by adding some words about my