As I indicated earlier, EMU is leading to more integrated financial markets. In the absence of national monetary policies, this accentuates the need of joint systems and standards for financial oversight. It also increases the need of readiness for the joint management of financial crises. Work in this field is now in progress in a variety of fora. Concluding remarks Internationalisation in general, with growth in trade and factor mobility, has brought the EU member states closer together and increased their interdependence. Politically motivated changes such as the internal market and the new monetary union have served to promote this trend. BIS Review 102/2000  4  As regards government finances, various processes, including a system of sanctions, have been set up to test national policies. This is because of the risk that individual member states would otherwise be able to pursue a policy that could harm the others. Processes have also been established in other policy areas to highlight key issues in the European debate, to point to good examples and to exert peer pressure. This should not be belittled: we know from Swedish experience that comparative analysis and in-depth debate can push things in the desired direction. So what should we expect in the future? I have briefly touched on a number of situations where cooperation and coordination could lead to a better EU policy.
Inflation’s convergence in the run up to Stage Three has been checked, however, and recently the spread has even become wider. This is hardly surprising in itself, neither is it a major problem. The process known as catching up means that countries with a below-average level of prosperity initially will benefit from technological and organisational advances elsewhere and accordingly grow faster than the rich countries, which in turn can lead to higher inflation. Furthermore, countries with strong export-led growth can experience upward wage pressure in other sectors, too, leading ultimately to higher inflation. So there are reasons why growth rates as well as rates of inflation can diverge in a monetary union without this being unnatural or a problem for either the countries in question or the union as a whole. It seems fairly evident that elements of this kind of “more innocuous” inflation are around at present. The clearest example is Ireland, with catch-up effects and a number of years of exceptional productivity growth. But even there the picture is not unambiguous and when inflation now increases in a number of member states, questions arise about the formation of stabilisation policy. This is definitely not a problem that can be tackled with measures of monetary policy. The function of monetary policy is to maintain price stability in the union as a whole, a mandate that seems to be generally supported and understood. Neither is there any cause to criticise how monetary policy has been conducted in practice.