Access to credit enhances welfare but also exposes the borrower to the scrutiny and discretion of creditors. A good example of how this works is provided by the Swedish economy. From the mid 1970s, problems with government finances led to external borrowing, which mitigated the effect on interest rates. But debt accumulated and an acceleration of this trend in the early 1990s led to an acute loss of confidence: interest rates shot up and after a time the krona fell. Besides illustrating how a country can be hit if its economy is not managed properly or if problems arise from other causes, this example shows that the imbalances may be generated gradually, so that timely signals can be an advantage. Perhaps prompter warnings would have put a stop to the economic mismanagement at an earlier stage. Something may thus be gained from the market sending clear signals without delay. But the situation should not be idealised. The functioning of financial markets is by no means perfect. Real economic problems can build up without attracting attention and when they are detected, the financial unrest is liable to spread to other countries for no apparent reason. The financial market’s reaction may also be out of proportion to the underlying imbalance. This brings me to the next type of problem. Financial instability in a global market Just as in any other market, financial market prices are basically a function of supply and demand.
Gertrude Tumpel-Gugerell: The progress of migration to SEPA Keynote address by Mrs Gertrude Tumpel-Gugerell, Member of the Executive Board of the European Central Bank, at the British Bankers’ Association, 7th Annual Payments Conference, London, 23 November 2009. *  *  *  Thank you for inviting me to speak at the British Bankers' Association on the occasion of the 7th Annual Payments Conference. 140 years ago, on Monday 22 November 1869, one of the world’s fastest, most technically advanced and also most beautiful merchant sailing ships was launched. Designed to be the first ship to bring home the new season’s tea from China to London, the “Cutty Sark” plied the oceans for decades. The ship is still preserved today, and you can marvel at her in Greenwich, just 20 minutes from here. On Monday 2 November 2009, just three weeks ago, the SEPA Direct Debit (SDD) was launched. I will not dare to speculate as to whether it is the world’s fastest, most technically advanced and most beautiful Direct Debit scheme, but the advent of a European direct debit scheme provides a truly new payment service at the European level. We would like to congratulate all those who have taken part in its development, particularly the EPC for their valuable contribution to this success. The SDD complements the SEPA Credit Transfer, which was launched in January 2008. With these two payment products launched, and with the Payment Services Directive (PSD) now in force, SEPA is well in place. However, not yet completed.