Economic Commentary: The operational framework for the implementation of monetary policy and experience of the financial crisis

Date 27/04/2012

In this Economic Commentary the authors briefly discuss the instruments that the Riksbank uses to steer the overnight rate and how well the operational framework for the imple­mentation of monetary policy does what it is designed to do. The authors find that the frame­work is able to steer and stabi­lise the overnight rate using relatively simple means. Experience from the latest finan­cial crisis also shows that the framework is flexible and can be used to manage ex­traordinary situations. However, an important lesson from the crisis is that new measures require some prepara­tion. To ensure that the Riksbank has the systems, routines and knowledge required to also be able to rapidly manage crises in the future, the Riksbank's toolkit needs to be complemented by, for example, bond portfo­lios in Swedish kronor.

 

Read the whole Commentary in the PDF-file.