Swedish monetary policy and EMU

The Riksbank has today published a brochure entitled Penningpolitiken och EMU (Swedish monetary policy and EMU - an English version will be available shortly). The purpose of this brochure is to elucidate a number of important, practical monetary policy issues that will arise if Sweden adopts the euro.

"As a public authority, the Riksbank will not be involved in the moulding of public opinion prior to the referendum, whether in the form of conducting campaigns or issuing recommendations. The Riksbank's role is to supply factual information to enable the general public to form their own opinions on this issue. Our hope is to provide those interested with further information and more indepth knowledge," says Riksbank Governor Lars Heikensten.

The brochure is divided into two parts. The first deals with the situation up to and including monetary union. This includes an analysis of Finland's, Italy's and Greece's entry into the preparatory exchange rate mechanism ERM/ERM2. The experiences of these countries can serve as guidance, as they joined the exchange rate mechanism later than other countries now participating in monetary union. Against this background, there is a more general discussion of important issues to be considered if the Swedish krona is attached to the exchange rate mechanism. This is followed by a discussion of how monetary policy can be conducted within the framework of the exchange rate mechanism up to actual monetary union. Shall the Riksbank continue to conduct monetary policy with a main view to future inflation in Sweden or shall the repo rate be adapted as quickly as possible to the level prevailing in the euro area? Another question taken up is the risk that the introduction of the euro in itself would lead to price increases in Sweden.

The second part of the brochure deals with how Sweden can best prepare for the new, single monetary policy in the Eurosystem. This includes a discussion of the differences between the way the Riksbank and the ECB conduct monetary policy with regard to targets, decision-making processes, liquidity control, transparency and communication. In addition, there is a discussion of the role the Riksbank might play in the Eurosystem and how membership might affect the bank's way of working in Sweden. The brochure concludes with a discussion of the consequences for stabilisation policy if Sweden no longer had a national monetary policy and the krona ceased to float against the euro.

The brochure is available as a PDF-file on the Riksbank's website under the heading Publications. It can also be collected from the main entrance to the Riksbank at Brunkebergstorg 11 or ordered by e-mail, forradet@riksbank.se, fax +46-8-7870526 or telephone +46-8-7870100.

The Riksbank's website also contains general information material on EMU, which is regularly updated.