banks as well as temporary purchases of assets, both private and public. circumvent the zero lower bound and bring down real long - term interest rates through purchases of government bonds, and / or interest rate guidance. as a consequence, central banks ’ balance sheets expanded by a factor of three, dramatically increasing their role in financial intermediation and sometimes raising concerns, at least in some quarters, about the possible inflationary impacttogether, this diversification and the increase in size have created more complex interactions with fiscal policies. specifically, asset purchases are sometimes seen as “ quasi fiscal policies ” both on the asset side ( due to the potential risks attached ) and the liability side ( when they contribute significantly to meeting the funding needs of the sovereigns ). bis central bankers ’ speeches at the time they were decided, those exceptional interventions were absolutely necessary. although it had been forgotten, central banks were initially created to protect the economy from excessive financial disturbances. this was, historically, their “ raison d ’ etre ”. as ultimate and unique providers of liquidity, they cannot escape this responsibility and let the financial system and the economy collapse. at the same time, by doing so, central banks have exposed themselves to a number of risks first, there are risks linked to balance sheet expansion. they cannot be ignored, although all central banks have been extremely careful in valuing the assets purchased or taken as collateral. second, they run the risk of blurring the lines between fiscal and monetary responsibilities. a dynamic use of their balance sheets by central banks has effects on the allocation and distribution of resources in the economy. they may favour or penalise some types of collateral or certain borrowers. if central banks take on additional responsibilities in the area of financial stability, they will have to do so in close cooperation with fiscal authorities, thus exposing themselves to possible interferences with monetary policy. the major risk, however, is the risk of confusion. a multiplicity of interventions could be interpreted as a relative dilution of objectives. there is a tendency by market participants and some policymakers to consider central banks to be “ universal problem solvers ” whose balance sheets can be used, without cost, for all purposes. there is also a doubt, at least an ambiguity, in the minds of some analysts, about the true purpose of government bond purchases. central banks ’ activism may create doubts as to their ability to stick to their core mandate – price stability – in the face of increasing pressures and constraints.

period ahead. 25 the krona does not need to be strengthened, but sweden is still affected by the global imbalances despite the fact that sweden has had a substantial current account surplus for 15 years there is nothing to suggest that this surplus must become a deficit within the near future to see for example lane and milesi - ferretti, 2002. for a more detailed discussion of the long - term development of the krona see lagerwall and nessen, 2009. bis central bankers ’ speeches prevent sweden from accumulating a large net claim in relation to the rest of the world. nor is there anything to suggest that the swedish krona should appreciate in real terms to enable a shift in the current account from a surplus to a deficit. as sweden, as far as we can see, does not have any significant positive net external position, there is nothing to say that the real exchange rate needs to be strengthened for reasons relating to the net position. a general reduction in the global imbalances could, however, have consequences for sweden. apart from the fact that this would reduce the risk of a new international crisis, it would mean that a larger part of global demand would come from those countries that currently have a surplus, for example china, and a smaller part from the united states. it is difficult to know, however, what impact this would have on the demand for swedish export goods. to the extent that chinese households and companies demand different types of goods than households and companies in the united states, this largely depends on whether swedish companies are flexible enough to adapt their production to meet changes in the pattern of demand. the asian countries that have surpluses are a long way from sweden and geo - graphical distance is a factor that has a clear negative link to the propensity of countries to trade with each other. 26 however, there are countries with substantial surpluses that are close to sweden, for example germany. it is therefore not obvious what the overall impact would be on the demand for swedish exports if there was a general reduction in current account surpluses and deficits. it is also conceivable that the united states would import more investment goods if its current account deficit decreased, as this would probably entail an expansion of the export - oriented industrial sector at the expense of the more domestically - oriented service sector. this in turn would entail an increased demand for the type of industrial goods that sweden exports quite a lot of. reduced global imbalances could also en