A new Riksbank Act (pending constitutional proposal, etc.)

Ingela Nylund Watz (S)

A new Riksbank Act (pending constitutional proposal, etc.)

Mr. Speaker! Today we shall finally make a decision on a new Riksbank Act and laws related to the matter. This means that we will have a new law for Sveriges riksbank from 1 January 2023.

One can only say that the road here has been long. I am one of those who has had the privilege of participating from start to finish in the work. It has been from the parliamentary investigation that was appointed in December 2016 and through a partial report on cash handling. The work proceeded with producing a final report which was submitted to the government in 2019. After that, it has occurred through an active process and dialogue between the department and party representatives in the Committee on Finance. It has continued until the government submitted a bill to the Riksdag in November 2021.

Against the background that changes are required in the Instrument of Government and the parliamentary procedure to get everything in place, this proposal was treated for the first time by the previous Riksdag. Now we are here and shall treat and establish the proposals in a second round, and we shall make a decision today.

That the process has been long is fully reasonable. Reality has changed in many ways since the old Riksbank Act came into force in 1989. The new economic-political landscape, including when it comes to the exchange rate regime, deregulation, and the internationalization of the financial markets, and not least our EU membership, demands that the Riksbank be covered by modern and purposeful legislation.

Mr. Speaker! For us Social Democrats, it has been of the utmost importance to reach as broad a parliamentary consensus as possible regarding the new law, and that we have also achieved. The Riksbank is a central actor in Sweden's financial system.

The fundamental mission to ensure that Swedish money maintains its value over time and to maintain an efficient payment system is crucial both for society as a whole and for individual citizens. Therefore, we believe that a political ambiguity regarding the Riksbank's mandate would be deeply unfortunate.

The new law and amendments to other affected laws now clarify the Riksbank's position as an independent central bank. The Riksbank shall finance its own operations and be financially independent from the state. At the same time, the conditions for democratic scrutiny, transparency, and oversight of the bank's operations are now strengthened.

The Riksbank's responsibility for monetary policy, the financial system, means of payment, peacetime crisis situations and heightened alert, as well as international activities, is now becoming clear. That responsibility, the powers and the tools that the Riksbank has at its disposal within each area are clarified with the new law.

It also becomes clear how the Riksbank shall handle different areas of responsibility within itself and in relation to Finansinspektionen and Riksgäldskontoret.

Mr. Speaker! In the new law, the price stability goal is formulated from having been expressed as to "maintain a fixed monetary value" to now being expressed as that "the goal is to maintain low and stable inflation." The new law also clarifies that the Riksbank, without setting aside the price stability goal, shall take real economic considerations and contribute to a balanced development of production and employment, which has been an important goal for us Social Democrats.

That the Riksbank determines the design of the price stability target is of central importance for economic policy and the economy of society. Therefore, it is important that any changes to the price stability target that the Riksbank wishes to make shall be examined here in the Swedish Parliament. If the Parliament does not wish to approve such a proposal from the Riksbank, the previous target shall apply.

The Riksbank's financial independence is strengthened by the new rules being introduced regarding profit distribution, equity, and borrowing of foreign exchange reserves. The relationship to Union law is clarified. It also becomes clear that the Riksbank shall apply the exchange rate system decided by the government.

The Riksbank's role for cash in society is regulated. Among other things, it becomes clear that the Riksbank is responsible for ensuring that there is cash throughout Sweden. The Riksbank is mandated to operate at least five depots for the storage and deposit and withdrawal of banknotes. It becomes clear that the Riksbank shall ensure that the public can make their payments during peacetime crises and high alert. The Riksbank shall further identify threats to sustainable development, and in the Riksbank's international work, the starting point shall be that the overall positions of the Riksdag and the government apply.

Certain organizational changes are also implemented. The Executive Board is reduced from six to five members, and an application procedure is introduced for hiring new members of the Executive Board. All members of the Riksbank Assembly and the Executive Board shall report holdings of financial instruments to the Riksdag. The Riksbank Assembly is tasked with responsibility for decisions regarding the bank's disposal of the year's result, and the Riksdag shall approve the same.

Mr. Speaker! Since the Riksbank is an agency directly subordinate to the Riksdag, I would like to particularly emphasize to the Chamber the expanded responsibility that the Committee on Finance receives through the new law when it comes to auditing the Riksbank's entire operations, i.e., not only the monetary policy and in no way the financial stability.

The expanded responsibility means, for example, that the Riksbank can be called to the committee regularly to be heard on other issues that are now covered by the law. This applies, for example, to cash management or crisis preparedness issues.

The committee's responsibility is expressed in the parliamentary rules, and the Finance Committee's resources are increased by 5 million kronor from 2023 onwards so that we in the committee can exercise the new responsibility.

I therefore wish to inform the House now that the Committee on Finance already during last week adopted initial decisions regarding the forms for the expanded oversight responsibility.

A permanent working group within the committee will be formed, which, together with administrative staff, will continuously plan and lead the review work ahead of decisions in the committee and, where applicable, here in the chamber. The committee will also develop the forms for continuous review of the Riksbank's board of directors' and executive board's securities holdings.

In conclusion: The decisions we make today regarding a new Riksbank Act mean that an extensive legislative work is being completed. Both the Instrument of Government and the parliamentary procedure are changed, a new Riksbank Act is put in place, and a number of laws are changed.

I would like to thank the representatives of the other parties for good cooperation during the years that the journey has been underway, and I would like to extend a special thanks to the relevant administrative staff in the Finance Committee and the Committee on the Constitution who have worked on this large legislative package. Thank you!

I vote in favor of the committee's proposal in the report and against the motion.

(Applause)

The speech at riksdagen.se, in Swedish (opens in a new tab)

Ali Esbati (V)

Mr. Speaker! Since the proposal for a new Riksbank Act also involves some constitutional amendments, it is being handled in two rounds. These proposals have been pending since last summer. Vänsterpartiet has some motions, which I will return to.

But I note - in line with what I did when the question was urgently up for consideration shortly before the Riksdag's summer break - that the process surrounding the new Riksbank Act, despite its scope, has actually not involved any public debate on the fundamental design of monetary policy.

The Riksbank investigation and the subsequent bill on a new Riksbank Act address the various parts of the Riksbank's activities very carefully. But the highly political question of the so-called autonomy or independence of monetary policy has been a taken-for-granted starting point and not a subject of debate.

The focus on questions regarding forms of decision-making and evaluation means, in practice, that there has been no major discussion about what is the very core of the activity: the management of inflation and its effects on households and the economy. This becomes somewhat strange and paradoxical. We have, for example, today's debate, with few participants and with the Left Party's motion as the only one, in a situation where inflation, the background to it, and the management of it moving forward are burning socio-economic issues.

Mr. Speaker! Today we see a dramatically changed situation in the world economy and in the Swedish economy, where we have a longer period with very low inflation and low interest rates behind us, while some asset prices have increased sharply over time. This situation has turned into a situation with very rapid price increases on a number of goods and services.

The background includes, among other things, global supply and coordination problems following the covid pandemic and the effects of Russia's war of aggression against Ukraine. It is difficult today to know how persistent or "sticky" the price increases will be, but it is easy to see that they are already having significant negative effects for households with small margins. It is also easy to see that the way the overall economic policy is handled from the state level plays a major role for this inflation shock's impact in both the short and long term.

In that situation, the Riksbank is left with its price stability goal as the overarching objective and with interest rates as the virtually only weapon – not to bring down inflation, but to bring down inflation expectations. It is possible to discuss the wisdom of this back and forth, not least when it comes to what effects it has on wage formation and unemployment and thus on which groups are those that have to bear the heaviest burdens. But the point here is that an actual debate on monetary policy cannot be conducted – or it is at least assumed not to have any impact on the actual monetary policy – even though these, i.e., the effects on income distribution and on the long-term development of the economy, are genuinely political issues.

We are dealing here with theories and notions that have governed important parts of economic policy since the 90s. In this case, it is about the idea that this part of the policy should be considered to stand above or outside other political considerations and be governed by other rules and, in fact, also by other goals. And it is not through general, intellectual sharpness that this survives, but by the fact that it has become codified and institutionalized. When it comes to the Riksbank and monetary policy, it goes all the way into EU treaties and into Swedish constitutional laws.

With this said, Mr. Speaker, I can state that much of what has been done in the Riksbank investigation and in the process preceding the bill is well-founded and also represents steps forward in several areas, including that it "clarifies that the Riksbank shall take real economic considerations within the framework of monetary policy."

There are also positive and clearer descriptions regarding the Finance Committee's review, and there are good clarifications concerning the cash handling and the Riksbank's role in it.

A few words finally on the Left Party's reservation where we state that we would have liked to see additions or changes in the new law: We want the Riksbank Act to be supplemented with an employment goal and that this goal shall not be subordinate to the inflation goal. It is difficult to see how consideration for real economic factors and the desire to promote a "balanced" development shall function effectively if employment and unemployment do not have a special status in the assessment of the economy. It is through organized, productive work that prosperity and welfare are built up, and it must be a central task for economic policy to promote this.

Such a dual goal for monetary policy, which the Left Party put forward in both the Riksbank investigation and in the follow-up motion to the bill, was also proposed by LO in its referral response to the Riksbank Committee's report. The government at the time argued in the bill that this would conflict with Union law.

Without opening up for a general discussion on EU law in the area, I can state that for many years Sweden has had legislation that, according to the Commission, conflicts with EU law, this because Sweden has not introduced the euro as a currency and has also not adapted the legislation to such an introduction. Since it - as is the case - does not seem to be a majority in Sweden for us to even join EMU fully in the longer term, it is a reasonable assessment that Sweden also does not need to adapt to that goal for monetary policy and the decision-making procedure for the goal that applies in ECBS, i.e., the European Central Bank System, and EMU. This is therefore a decision that should lie in our own hands, and it would be valuable both in principle and in practice if the Swedish Riksdag utilized and tested this space. This is therefore what the Left Party proposes in the follow-up motion to the bill.

Vänsterpartiet also proposes that the Riksdag should have the right of initiative and decide the more precise goals for monetary policy, including the real economy goal that I mentioned. In the proposal for a new Riksbank Act, there is indeed the wording that the specification of the goal shall be "anchored in a democratic order". But it is the Riksbank that should have the exclusive right of initiative to specify the price stability goal.

This is a difficult-to-explain situation, and even in this case, the Riksdag should act to utilize a certainly narrowly defined legal maneuver under EU law.

With this, I move for the reservation to be approved.

The speech at riksdagen.se, in Swedish (opens in a new tab)

Ulrik Nilsson (M)

Mr. Speaker! Strength and security - that is what it said on the banknotes in the past. I looked this morning, and I do not think it says so anymore, in any case not on the hundred-kronor and twenty-kronor notes that I had in my wallet.

From strength comes security - from this, strength and security. This was once said because the ability to trust money and its value is a prerequisite for being able to develop. It is a prerequisite for achieving good development in a society, naturally together with protection for individual freedom, legal certainty, protection of assets, and the like. Therefore, it is so incredibly important with the Riksbank - it enables all Swedes to be creative and to work long-term and forward.

But that assumes that I can trust the institution that stands behind it. Hand on heart - a piece of paper or a small piece of metal does not have at all the value that is printed on it, but the value is secured by an institution that lies behind it, an institution that we must be able to trust, a central bank. To take it one step further, it is clear that a one or a zero in a data network somewhere also needs that institutional guarantee to be reliable. Therefore, those Latin words about strength and security were printed on the banknotes once upon a time to say: We have thought this through. We have a system that guarantees the value, a value that is central for society to function. Therefore, this is also a constitutional law.

But in this, Mr. Speaker, it naturally also lies that we must keep pace with the times. We have increasing international cooperation. The metal values that were once international are perhaps not fully so today. But above all, we must cooperate with others. We must have new systems to secure these assets. We must have new instruments. We must, therefore, modernize the foundation for security that the Riksbank provides, and it is such a modernization that the Riksbank Committee has come forward with.

It is also what the new Riksbank Act is about: to incorporate all new consequences by expanding and broadening instruments and international cooperation. It is also about the view that when a crisis occurs, those ones and zeros might not work, and then a functioning cash management is needed.

The proposal involves a number of changes to the Instrument of Government, as Ingela Nylund Watz has described in detail. It also involves a change in the parliamentary rules of procedure. All of this aims to achieve a modernity in the system that nevertheless manages to secure the value so that we can all trust the issued money.

Mr. Speaker! The proposal also involves a renewed Riksbank legislation that to a very high degree addresses these changes and concretizes what is to be carried out. This concerns things such as the size of the executive board and recruitment, but what perhaps most of us will be able to state is that it is made very clear that there shall be a cash management system that functions even in situations of crisis in Sweden – peacetime crisis, it says in the bill. In the long term, there shall be six depots that have cash management.

This far in the proposal, everyone is in agreement: We need to update the Instrument of Government and the parliamentary procedure, and we need a new central bank law. This unity, I believe, is extremely essential for us to build the trust that the entire matter is about. This far, Mr. Speaker, I think everything is calm and good.

Then there is a reservation. I fully understand that one wants to include employment or, as we sometimes call it, the work line in as many places as possible. This is, however, rather a matter of economic policy than something to be regulated in law. To regulate in law what one can and cannot do, or shall and shall not do, restricts the scope of action in the future for those who have to handle this. I believe it is somewhat misguided to make the system so over-determined.

As I said initially, the stability of the exchange rate is crucial for our citizens' way of acting and taking care of this issue. Therefore, I want to move for the rejection of the reservation in the Committee on the Constitution's report.

In summary, Mr. Speaker: For me, this is a very positive change. It is positive with the consensus. It will serve us well. I move for approval of the Committee on the Constitution's proposal for a decision and rejection of the reservation.

The deliberation was hereby concluded.

(Decisions were made under § 19.)

The speech at riksdagen.se, in Swedish (opens in a new tab)