lars heikensten : inflation targeting in sweden - implementation, communication and effectiveness opening remarks by mr lars heikensten, governor of the sveriges riksbank, at the conference on inflation targeting : implementation, communication and effectiveness, stockholm, 10 june 2005. * * * i would like to begin by welcoming you all to stockholm and to this conference on inflation targeting. the idea of holding this conference was hatched a couple of years ago, when lars svensson and i were talking about how the thinking in this area has evolved in recent years both in theory and in practice. where do we stand today in research terms as well as in practice? and what can we learn from each other on the basis of our experiences? the fact that the conference was planned to take place this year provided added incentive, as it is ten years since sweden ’ s inflation targeting regime was fully implemented in accordance with the original decision in 1993. we decided to spread the word in our respective networks : lars on the academic side and i on the practical side. we are delighted that you, our colleagues and friends, have accepted our invitation, and believe we can look forward to a rewarding discussion of where inflation targeting stands today and how it can be developed further. i do not think it is an exaggeration to say that monetary policy today is, on the whole, being conducted better and more prudently than ever before. in many countries, the key to this success has been inflation targeting. although the main reason for introducing inflation targeting in many cases - not least sweden ’ s - has been frustration over the previous regime and economic performance, it has subsequently proved to work so well that it now stands out as an interesting option also for already well - functioning economies. this is demonstrated in particular by the current debate regarding a possible introduction of inflation targeting in the united states, where the economic performance in recent decades has been remarkably good and monetary policy successful. but first, before i go into a problem that currently feels significant for us at the riksbank and that i also think is central to the discussion in the united states and elsewhere - the balance between concerns for output stability and inflation stability - allow me to say a few words about my fundamental views regarding inflation targeting policies. unsurprisingly, i see considerable advantages of having an explicit, symmetric inflation target. it is also my impression that this view enjoys considerable support in the academic literature, an assertion, however, that no assembly is better

compared with around 95 % at the end of june. the global rise in yields has led to a reduction in the share of negative - yielding government bonds worldwide from over 30 % at the end of june to around 20 % most recently. although this trend can be seen as a step towards normalisation on the bond markets, it is important to recognise that higher us yields and the associated appreciation of the us dollar could become a burden for some emerging economies. on the foreign exchange market, the swiss franc came under increased upward pressure for a brief period after the brexit vote. this pressure abated again, not least due to the swiss national bank ’ s willingness to intervene on the market. while the pound sterling continued to lose value over the summer months, other key currencies, including the swiss franc, moved sideways within a narrow range ( cf. chart 3 ). heightened uncertainty in the run - up to the us presidential election was once again reflected in growing demand for safe - haven currencies on the foreign exchange market, leading to slightly higher swiss franc exchange rates. following the us election, the us dollar appreciated on a broad basis. the strengthening of the currency occurred against the backdrop of the rise in us interest rates mentioned earlier. the dollar gained approximately 3 % in trade - weighted terms after the election. the recent developments in the us also had an impact on other currency areas. currencies in emerging economies in particular came under pressure and, as a group, weakened by around 4 % against the us dollar. on a trade - weighted basis, the swiss franc has changed little from its end - june level. nevertheless, swiss franc exchange rates moved in different directions. while appreciating more sharply against the yen than against the euro and pound sterling, the swiss franc weakened against the us dollar and currencies of commodity - exporting countries. overall, the swiss franc is still significantly overvalued. the market environment remains challenging and fraught with global economic and political risks. the snb therefore continues to monitor events on the foreign exchange markets very closely. impact of negative interest on the money and capital markets let me now turn to the impact of negative interest on sight deposits at the snb on the swiss franc money and capital markets. as you know, since the introduction of the negative interest rate in january 2015, key money market rates such as the three - month libor have hovered, as intended, around – 0.