Q: You have started a review of the mandate of the Riksbank [Sweden's central bank]. What is the reasoning behind this, and could it include a change to the inflation target and its base?
A: It has been 20 years since [the Riksbank’s mandate] was last reviewed. Although the government and the parliament have come to the conclusion that the Riksbank has been successful, it is important to review legislation in order to keep it up to date. [For that, a] commission has been launched. It is expected to report back to the government on May 31, 2019.
The commission will also evaluate whether the inflation target, its level and its base, should be fixed in legislation. [Currently, monetary policy is targeting consumer price index inflation of 2%.]
Q: Meanwhile, the mandate and resources of your financial services authority [FSA], Finansinspektionen, have been reinforced. Is the system of financial regulation now clearly set out?
A: The decision to put macro prudential policy into the FSA is widely adopted and has strong political support across Swedish politics. We are quite content with that.
Every year that we have been in government [since 2014] we have increased the resources to the FSA. We have managed to increase its size and its activity quite dramatically over time and I am doubtful that we could have been effective in doing even more in such a short timespan. But of course we will continually look into the need for resources in the FSA, especially now that the biggest bank, Nordea, has decided to move its whole business to Sweden.
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We have also established the debt office as the responsible authority for the BRRD [the EU’s bank recovery and resolution directive] and the resolution work, so it holds another part of the responsibility for financial stability.
Q: You recently suggested moving the European Banking Association [EBA] from London to Stockholm after Brexit. What is your case for this?
A: The financial sector in Sweden is strong, very competitive and we are at the forefront when it comes to technological and methodological development. The digitalisation of the economy is moving rapidly in Sweden and that also gives rise to new opportunities [such as] a very vivid fintech sector.
Our view is that the rest of Europe and then the rest of the world will follow suit. It is good to have an authority in the place where change is happening to get an opportunity to prepare and be aware of what is coming.
Shifting the EBA into the eurozone [Sweden is not in the eurozone] would also change the stability and playing field when it comes to the European economies. [Having the EBA in Stockholm] would strengthen the Swedish financial sector and Sweden as a hub for financial activities.
Q: You are Sweden’s first minister for financial markets to come from the Green Party. Does this have an impact on policies?
A: We have high ambitions in the areas of green and sustainable finance. We have set a target in Swedish politics for the financial system to contribute to sustainable development and that is now leading the work for the financial authorities such as the FSA, which has been looking into the connection between sustainability issues and financial stability and shown that there is a strong connection. That is something we really need to be aware of, and we need to develop our methodology to assess climate risk.
Many people have thought that there is a choice to make between sustainability and delivering profits, but the truth is that if you do not work well and thoroughly on sustainability issues, you will not be able to make profits in the markets of the future.
Q: In your role as deputy minister of finance, what do you see as the key factors behind Sweden’s economic success?
A: Fortunately, it is not just one single reason why the economy is growing rapidly. There is quite a strong foundation for growth in private and public consumption and in investments, and we also have a growing population.
We have fruitful conditions for business development in Sweden. We also are at the forefront in sectors that have shown to be more and more important for economic development: digitalisation, but also the development into a sustainable economy, moving away from fossil fuels and into a renewable economic future. Of course, we do it because we think it is morally right, but we also see increasing signs that it is also financially and economically beneficial.
