Ekholm: Macroprudential policy and clear communication contribute to financial stability
On Friday, Deputy Governor Karolina Ekholm delivered the speech "Macroprudential policy and clear communication contribute to financial stability" at the Swedish Bankers' Association in Stockholm. Ms Ekholm discussed the need for macroprudential policy in light of the experience of the financial crises of recent years and talked about the factors that need to be taken into account to implement an effective macroprudential policy in Sweden.
Ms Ekholm took the experience gained in the financial crises of recent years as the starting point for her speech. She concluded that better fiscal and monetary policies would have left the United States and the European Union better equipped to face the crisis of 2008, but would have hardly prevented the crisis. Her view was that measures are needed that instead focus more directly on imbalances in the financial system as a whole, in other words macroprudential policy.
Ms Ekholm then described how the concept of macroprudential policy emerged as a response to the global financial crisis and discussed the tools that such a policy area may need. She noted that the Riksbank and Finansinspektionen have temporarily coordinated their respective macroprudential tasks in Sweden by setting up a joint council for cooperation on macroprudential policy. Ms Ekholm pointed out that communication is the most important tool for macroprudential policy at present. Experience shows that communication concerning financial stability must be transparent, credible and clear. In the longer term, it is important to make it clear where responsibility for macroprudential policy should lie. This should be guided by the fact that the conduct of macroprudential policy requires the power to make decisions, independence and accountability. In conclusion, Ms Ekholm noted that macroprudential policy can never take the place of well-balanced fiscal and monetary policies, but will act as an important complement to these policy areas.
Read the entire speech in the PDF file.
