Policy Papers No. 2 - Monetary policy in the nordic countries: Experiences since 1992

October 1997

Foreword

Among the countries most affected by the European currency crisis of 1992/93 were the five Nordic countries. Some were forced to float their exchange rates and others experienced marked changes in their competitive position. The currency crisis also called for changes in the formulation and implementation of monetary policies in the Nordic countries and a search for alternative and credible nominal anchors.

Against this background, the BIS invited representatives of the five Nordic Central Banks to a one-day meeting (on 30th May 1997) on monetary policy in the Nordic area and the experiences since 1992. To stimulate the discussion, each of the Nordic banks were asked to produce a background paper focusing on the principal forces behind the developments in output and inflation since 1992, the role of macroeconomic policies, and the major considerations behind, or constraints on, the formulation and implementation of monetary policy. To broaden the discussion, representatives from five other central banks were also invited to act as "lead discussants" of the background papers.

As the participants felt that the issues discussed at the meeting were of interest to a broader audience, the five background papers are presented on the following pages, together with the discussants' comments and two contributions from the BIS staff. I hope they will be of value to analysts and policy-makers who may be considering similar questions in a different context.

ANDREW CROCKETT
General Manager