Governor Talk – Sweden: Central Banking in Uncertain Times


Location: IMF Connect


Stefan Ingves

Governor of Sveriges Riksbank and Chairman of the Executive Board

Stefan Ingves holds a PhD in economics. Mr Ingves has previously been Chairman of the Basel Committee, Director of the Monetary and Financial Systems Department at the International Monetary Fund, Deputy Governor of the Riksbank and General Director of the Swedish Bank Support Authority. Prior to that he was Under-Secretary and Head of the Financial Markets Department at the Ministry of Finance.


Alfred Kammer

Director, European Department, IMF

Mr. Kammer was previously the Chief of Staff of the Office of the Managing Director, advising the Managing Director on strategic and operational issues and overseeing operations for the senior management team; Deputy Director of the Strategy, Policy and Review Department, overseeing the work on Fund strategy and surveillance policy; Deputy Director of the Middle East and Central Asia Department, overseeing regional economic developments and financial sector issues; Director of the Office of Technical Assistance Management, advising management on technical assistance operations and overseeing fundraising and global partnerships for capacity building; and Advisor to the Deputy Managing Director. Mr. Kammer also served as resident representative of the IMF in Russia. Since joining the IMF, Mr. Kammer worked with countries in Africa, Asia, Europe, and the Middle East, and on a wide range of policy and strategic issues.


Key Points:

  • Focus. The talk focused on the current monetary policy issues, including monetary policy normalization and the optimal size of a central bank balance sheet, housing market vulnerabilities and the role of macroprudential policy, and on opportunities and risks stemming from the development and issuance of central bank digital currencies (CBDCs).
  • Rate or Balance Sheet Normalization. There is no certain order between shrinking the central bank balance sheet and raising the policy rate. The Riksbank was the first central bank that phased out negative interest rates and let its main asset purchase programs expire at end-2021. Winding down asset purchase programs should be tailored to country circumstances and market conditions. The size of the central bank balance sheet is determined by the structure of the financial sector and the optimal size varies from one country to another.
  • Low rates for long. The prolonged period of low interest rates has created the unintended consequence of high real estate prices and many households are vulnerable to interest rate increases.
  • Housing Market. Macroprudential policy can play an important role in addressing housing market vulnerabilities, but housing market structural rigidities too should be addressed.
  • CBDCs. There are opportunities and risks stemming from the CBDCs. The underlying issue remains the extent to which the public can hold central bank money in one form or the other. Countries need to have the ability and capability to produce their own fiat currency in a way that is transactionally efficient.


“I don’t think that macroprudential can ever fix every imaginable problem in the housing market. In my own country, we have many different structural rigidities in our housing market and that creates an environment where everything is sort of pushing households to borrow more and more.” Stefan Ingves

“The pandemic has underscored the significance of digitalization in our daily lives and in the area of finance and trade.” Alfred Kammer

“In the future, you will be able, in a small country, to buy a CBDC system off-shelf because the technology is out there and available.” Stefan Ingves

Contributor: Mentor Mehmedi