Sweden’s Experience of Deploying Monetary and Macroprudential Policies: A Discussion

The 2008–2009 Global Financial Crisis highlighted the potential value of pre-emptive policy action to reduce the risk of financial instability, as well as expanding the armoury of mitigating actions should such risks crystallise. This is now widely accepted and reflected in: the introduction of new instruments, such as the Basel III countercyclical capital buffer; the formalisation and deepening of the arrangements for the deployment of those instruments, such as the creation of financial policy committees; and the explosion of analytical work in central banks and academia to improve our understanding of those tools and how they interface with monetary and fiscal policies. However, we are still very much in the foothills and there is much to learn from each other’s experiences. So comparative studies, like those in this volume, are of considerable value, especially as macroprudential policy architectures are quite heterogeneous, usually building on existing national arrangements rather than reflecting conscious design…