STOCKHOLM Dec 9 A commission due to examine
Swedish monetary policy will scrutinise the Riksbank's targets
and tools, its independence, responsibility for financial
stability and its role in international organizations such as
the IMF, a source said on Friday.
The centre-left government is likely to officially appoint
the parliamentary commission next Thursday, sources familiar
with the matter said, after an independent review this year
recommended sweeping changes in how the central bank operates.
The inquiry and legislative changes it is likely to lead to
could shape monetary policy in the coming decades, with the
Riksbank's targets one of the key issues to be investigated.
The Riksbank has been under fire for years for undershooting
its 2 percent inflation target and an independent report by
former Bank of England Governor Mervyn King and U.S. economist
Marvin Goodfriend recommended extensive changes to the central
The review recommended in January that the Riksbank be given
more flexibility around its inflation target and have a broader
focus in times of crisis.
"The commission will be based on Goodfriend and King's
report and the problems they highlight," a second source said.
The bank has slashed interest rates to a record low of -0.50
percent and launched a large-scale quantitative easing programme
in a bid to revive inflation.
Since the Financial Supervisory Authority, a financial
watchdog, was given responsibility for financial stability, the
Riksbank has steered away from considering such issues.
But the King and Goodfriend report suggested the central
bank's mandate should include financial stability and that it
needed formal powers to achieve that, something Riksbank
Governor Stefan Ingves has long advocated.
The commission will also look at the division of
responsibility for exchange rate policy between the government
and central bank, a key issue since the Riksbank has given its
head a mandate to intervene in the currency market if needed.
King and Goodfriend suggested organisational changes at the
bank including reducing the number of members on its board. The
commission will have no specific instructions regarding the
organisation other than to review it, however, the sources said.
A finance ministry spokeswoman declined to comment.
The sources said there is political agreement to ask Mats
Dillen, a former head of government think-tank the National
Institute for Economic Research to lead the commission.
Dillen, 55, told Reuters he had not been officially asked to
"The government might wait a little while to announce
Dillen, but everyone has agreed that he should lead the
commission," one source said.
(Additional reporting by Daniel Dickson; Editing by Niklas
Pollard and Hugh Lawson)