of electricity prices across different regions of sweden. note that there is a big difference between long - term investments that improve the functioning of the economy and strengthen supply side, which dampens inflation, and discretionary fiscal policy that can temporarily support households and businesses but risks increasing inflation. 2 drama thirty years ago we are living in dramatic times : a recent pandemic, war in ukraine and inflation that has risen sharply around the world. one similarity between then and now is the major geopolitical drama. then, there were revolutionary events such as the reunification of germany in october 1990, the kuwait war, the wars in former yugoslavia which started in 1991, and the dissolution of the soviet union in december of the same year. the political events made their mark on economic developments. i have often thought of the 1990s crisis as a domestic financial crisis. however, it is important to remember that it was a series of international events, combined with weak domestic economic policy frameworks, that made the crisis deep and prolonged. let me briefly give some background. 5 the german reunification, which created a local german boom and inflation that caused the bundesbank to raise its policy rate, had a particularly strong international impact. this attracted large amounts of capital to germany as investors in other countries sought the high return on the german capital market. this in turn led to an increase in tensions within the european exchange rate mechanism, the erm. other erm countries were forced to raise their policy rates to maintain the exchange rate parities, despite the fact that this worsened the already weak economic activity there. in sweden we had not created systems that could withstand the pressure this entailed for the swedish economy. in the mid - 1980s, sweden had begun to phase out the outdated and inefficient regulation system for credit markets. deregulation was perceived at that time more as a technical measure that was structurally necessary, but the effects on the macroeconomy came to be much greater than most policymakers back then had anticipated. neither lenders nor borrowers were used to managing the risks in a deregulated environment and lending grew too strongly. the fact that currency regulation was still in place meant that swedish investors were largely dependent on the domestic asset markets, where prices were soaring. in addition, the tax rules meant that the impact of interest expenses was reduced, which would change with the tax reform in 1990 - 91. moreover, there was a strong domestic inflation trend with price and wage spirals, which had

- year government bond yields. sources : macrobond financial and the swedish national debt office. the overall picture is that the reforms implemented have benefited sweden well. both companies and households have benefited greatly. the economy has functioned better and prosperity has increased. let me highlight three lessons from the crisis and subsequent reforms : first, well - functioning frameworks make crisis management easier. sweden was well equipped to deal with the economic consequences of both the financial crisis and the pandemic. both fiscal policy and monetary policy could contribute to counteracting the economic slowdown and help the recovery in the swedish economy on these occasions. sweden therefore managed the economic effects of both the financial crisis and the pandemic better than many other countries in the western world. second, one must be careful about declaring that things will look a certain way for all time, even if that has been the case for a while. too much consensus on the possibilities of the fixed exchange rate thirty years ago meant that it took too long to embark on a more favourable economic path. more recently, we have seen that inflation was not ‘ dead ’ as some commentators argued not very long ago, and a monetary policy with low interest rates and bond purchases was not something that lasted forever ( ‘ low for long ’ and ‘ qe infinity ’ ). third, reforms are painful in the short term, but often produce faster and greater results than expected. after the reforms were introduced, the swedish economy quickly turned upwards and prosperity increased more than expected. at the same time, it is clear that not everything has developed for the better. vulnerabilities have been built up that can make policy tightening painful ; high private debt, a housing shortage, a divided labour market and lack of investment. 8 these are structural problems that make the swedish economy vulnerable. i will talk about this in more detail soon. but when we think about our frameworks and their future, we also need to bear in mind, as i said earlier, that the swedish and global economies have changed since the 1990s. the swedish and global economies are different from thirty years ago the first thing i want to highlight is globalisation over the last few decades. the primary manifestation of globalisation is the entrance of china into the global economy. this has meant that the working population in the world has increased significantly, as have goods and services originating outside europe and the united states. china's entrance has also meant an increase in the global supply, which has probably dampened consumer prices and