Riksbank Deputy Governor Cecilia Skingsley Discusses Potential for Helicopter Money

19-May (Riksbank) — Now that Swedish inflation is starting to approach the target, it may be time to think about the conditions for monetary policy over a longer perspective, according to Skingsley. If it has become more difficult to conduct monetary policy, what can the Riksbank and other central banks do?

Skingsley says that it will not be possible, in the future, to conduct monetary policy in the way and with the impact we have previously been accustomed to. And this is something for which we need to prepare ourselves. She notes that, alongside cutting the policy rate to below zero and purchasing securities, so-called helicopter money could provide a hypothetical path to take to increase scope for monetary policy.

“It is probably something that should not be tried until other possibilities have been exhausted. However, considering the difficulties that are weighing many of the world’s economies down, I think that it is wise to discuss the different possibilities, without closing any doors,” says Skingsley.

She also examines the possibilities of raising the inflation target to create a greater degree of freedom in monetary policy.

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