Swedish Politicians Embrace Opening to Gain Control of Riksbank

  • Government will seek discussion on imposing dual mandate
  • Opposition won't exclude any changes to Riksbank law

Swedish lawmakers have spotted an opening that will allow them to reassert control over the central bank.

Politicians across the political divide on Tuesday welcomed the review, which was led by former Bank of England Governor Mervyn Kingand recommended giving parliament the power to define the inflation target and making it clearer that only the government can decide on what currency regime is in place.

The government as well as the opposition said the review opened up for further discussion with a view of changing the bank’s framework. Finance Minister Magdalena Andersson said that those discussions would potentially include a dual mandate that takes into account employment, which the King report recommended against.

The proposals are “interesting” and a “good starting point” for a well-needed parliamentary review of the Riksbank law, Andersson said in an interview.

The review called for the finance minister to propose and parliament to set the level and define the inflation target, which also said should be stripped of changes to mortgage costs. The review proposed that the Riksbank should be given more leeway to reach the 2 percent target, which should also be reviewed every ten years.

The Left Party, which has been the most vocal about its dissatisfaction with the Riksbank, repeated calls for a target for employment or the real economy on top of inflation. The Left Party backs the minority Social Democratic-led government in parliament.

“To our delight, we’re seeing that the reviewers have made the conclusion that the Left Party has argue for many years,” said economic spokeswoman Ulla Andersson. “Those elected by the people decide on the target and the Riksbank executes. That’s important, not the least from a democratic perspective.”

The four Alliance opposition parties also welcomed the proposals.

“I don’t exclude any of it,” said Ulf Kristersson, vice-chairman of parliament’s finance committee and economic spokesman for the largest opposition party. ”My sense is that we’re rather in agreement between the opposition and the government that there are good reasons to review the Riksbank Act and appoint a traditional and formal review to do that job.”

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