STOCKHOLM, June 12 (Reuters) - Sweden’s parliament said on Friday it had appointed two academics to evaluate the unprecedented period of negative interest rates and massive asset purchases conducted by the central bank between 2015 and 2020.
Central banks have taken an ever greater role in economic policy in the wake of the financial crisis and again during the outbreak of the new coronavirus, often able to scramble a response more quickly than governments themselves.
But that has opened up a debate about their independence, democratic oversight and what tools properly belong to the central bank rather than other authorities.
Nellie Liang, Senior Fellow at the Brookings Institution and Patrick Honohan, a former ECB board member and Professor Emeritus at Trinity College, Dublin will study Riksbank policy over the last five years and report to parliament at the latest in 2022.
Between 2015 and 2020, Sweden adopted negative rates for the first time and launched a quantitative easing programme that has left the central bank owning around 50% of the outstanding volume of bonds issued by the national government.
The extraordinary policy measures taken by the Riksbank have already led the government to announce it will update the law governing the world’s oldest central bank.
A commission, which reported in November last year, proposed sweeping changes, widely seen as reducing the central bank’s independence.
They include eliminating the governor’s veto power over policy decisions, extending the bank’s mandate to include promoting economic growth, and giving parliament a say in changes to the bank’s inflation targets.
The Riksbank has argued that the changes proposed by the commission reduce its ability to act quickly in a crisis, increasing risks to the economy.
Changes to the Riksbank law will come at the earliest in 2023, after the next election.
Reporting by Simon Johnson, Editing by William Maclean