Per Jansson: The ideological debate on monetary policy - lessons from developments in Sweden

Speech by Mr Per Jansson, Deputy Governor of the Sveriges Riksbank, at Fores, Stockholm, 6 December 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

These are unusually exciting times to be working at a central bank. Challenges have always been present, of course, but I think that it could be claimed that seldom have they been of such a fundamental nature as they are today. One example is the debate on limiting central banks' independence that has arisen recently. This has come about after several countries have found themselves unable to conduct monetary policy using policy rate adjustments alone. Instead, they have had to complement this with tools that some observers feel have blurred the boundary between monetary policy and other economic policies. Another example is that technological progress within the area of payments has led to the rapid decline of cash usage in a number of countries, not least Sweden. Whether and how this trend will affect the conditions for conducting monetary policy and whether it provides reason for the central banks to issue electronic money as a complement to physical cash will be the focus of intense discussions in the period ahead.

These are important and fundamental issues. Today, however, I would like to focus on another discussion, one that I feel is at least as vital and, at the moment, perhaps even more relevant. This concerns whether the conditions for monetary policy have changed so much in recent years that central banks will be forced to abandon, or at any rate considerably modify, the inflation-targeting policy that has been the dominant monetary policy regime of recent decades.