villy bergstrom : can we be best again? the importance of capital formation for long - term growth speech by mr villy bergstrom, deputy governor of sveriges riksbank, at a meeting in kiruna, 8 december 2003. * * * i would like to begin by thanking you for the invitation to come here and speak before the local group of the center for business and policy studies. i intend to speak today about the factors that affect a country ’ s long - term growth capacity. to this end, i will focus on the role played in this regard by capital formation, but will also discuss other important factors such as changes in both the labour supply and the age structure of the population in the coming years. like many other countries, sweden is facing the problem of an ageing population. this is going to place a greater burden on the public finances and will entail increased demands on the working population to forgo consumption in favour of supporting the elderly. meanwhile, labour force growth in sweden will be slower in the years ahead. moreover, the rate of net investment in sweden is low in comparison to previous periods. this affects sweden ’ s long - term growth capacity and thereby also the prosperity of people in general. it is these topics that i shall be concentrating on in my speech today. but allow me first to begin with a few words about the riksbank ’ s role in this context. the riksbank has little opportunity to influence sweden ’ s long - term growth capacity as everyone knows, one of the riksbank ’ s statutory remits is to promote price stability. a large part of the riksbank ’ s operations revolve around this remit. in order to be successful in this regard, it is important that the process of wage formation works well and that both the central and local governments manage their finances in a responsible manner. relatively stable inflation in recent years and expectations of future inflation around the riksbank ’ s target of 2 per cent indicate that the bank has been successful in its conduct of monetary policy in recent years. this success has been largely attributable to increased stability in economic policy in general ; in particular, fiscal policy has been governed by a ceiling for central government expenditure and a surplus target for the public finances. furthermore, partly as a result of greater credibility for the riksbank ’ s inflation target, the social partners have managed to halve the rate of wage increases from the levels that were common in

, i am very comfortable at this point with a decision to start to taper our asset purchases before the end of the year and, preferably, as early as at our next meeting in november. in my view, our asset purchases were an important part of our response to the economic effects of the pandemic, but they have essentially served their purpose. i am mindful that the remaining benefits to the economy from our asset purchases are now likely outweighed by the potential costs. in particular, i am concerned that our asset purchases could now be contributing to valuation pressures, especially in housing and equity markets, or that maintaining a highly 5 / 6 bis central bankers'speeches accommodative monetary policy stance at this stage of the economic expansion may pose risks to the stability of longer - term inflation expectations. if the expansion continues as i expect, i will support a pace of tapering that would end our asset purchases by the middle of next year. in closing, i would say that our economy has made great strides this year, which is a testament to the resilience of u. s. households and businesses and the many challenges faced throughout the pandemic experience. while many risks to the outlook remain, i expect that the recovery will continue in the coming months, and that steady progress will be made toward our maximumemployment and price - stability goals. 1 the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. return to text 2 except in very unusual circumstances, monetary policy decisions are made during our regular fomc meetings eight times each year. the 12 reserve bank presidents and the members of the federal reserve board of governors participate in these meetings, with 5 of the 12 presidents and all of the governors voting as members of the fomc. return to text 3 see the december 2020 fomc statement ( paragraph 4 ), which is available, along with other fomc statements, on the board's website at www. federalreserve. gov / monetarypolicy / fomccalendars. htm. return to text 6 / 6 bis central bankers'speeches