Rothstein questions, in an article on DN debate, the Riksbank’s sacred status as independent. Independence from politics and politics’ transfer of important decision-making power to an authority or body, in this case the Riksbank, presupposes that those who sit there have some form of “secured knowledge”, emphasizes Rothstein.
The Riksbank makes decisions about the key interest rate, and the bank’s most important tasks are to defend the value of the krona and keep inflation in check. But the bank doesn’t seem to know what it’s doing, Rothstein claims. It is true that inflation is now at the EU average, but more than a handful of countries have significantly lower inflation.
The big failure for the bank, however, is that the krona has lost so much value against the euro since it was introduced and the Riksbank gained its independence. according to Rothstein.
“The problem is that the Riksbank cannot provide any explanation for this dramatic fall in the Swedish krona or how it could be counteracted.” writes Rothstein.
He states that the Riksbank has hired experts who have arrived at the conclusion that knowledge and national economic research lack answers as to why things are going the way they are for the krona.
“This raises the question of why the Riksbank should be entrusted with independence at all, when, according to its own and leading economists’ statements, it lacks assured knowledge of the tasks it has to solve. With the current construction, we have only got politics conducted by non-elected people.” writes the professor.
Since the bank’s interest rate decisions are of decisive importance for people’s finances and the distribution policy, it can be questioned, argues Rothstein, whether the bank should have that power. It is time that Sweden also starts a discussion about the “dogma” about the positives of independent central banks.