A distinct message that we intend to remain outside the euro area for the foreseeable future would probably weaken our influence in the European Union still more. Our partners in Europe would then be less interested in allowing for our positions on other matters as well. The monetary union is, after all, one of the Community’s most central integration projects. On the other hand, the economic consequences of Sweden still having a flexible exchange rate should not be exaggerated, at least in the short run. Basically, the development of the exchange rate and interest rates depends on how we manage Sweden’s economy relative to the euro area. If we succeed in making our economic policy credible, the costs of remaining outside for some years should not be unduly high. But our decision not to participate does mean that we need to be extra clear in demonstrating our determination to implement a sound economic policy, focused on sustained growth with low inflation and high employment. There are no easy short cuts, even in the short run. That Sweden, as a euro outsider with a flexible exchange rate, will have to live with exchange rate fluctuations is evident from events last autumn. We know from international experience that  BIS Review 9/1999  –3–  floating exchange rates do in fact float. Not even good economic fundamentals suffice to ensure stability in financial markets. Here we have a price for being outside the monetary union.
As at 9 March 2012, the outstanding amount in the Malaysian bond market was RM899 billion compared to RM301 billion at the end of 2001. This represents a 300 per cent increase over the last decade. Within the region, both Hong Kong and Malaysia have participated actively within the EMEAP Group in promoting regional bond market development initiatives such as the Asian Bond Markets Initiative and the Asian Bond Fund. I am confident that this pilot platform will bring benefits, not only to Hong Kong and Malaysia, but the region as a whole. We envisaged that this pilot platform will increase the efficiency of issuance, investment and settlement of bonds through the increased harmonisation of cross-border processes and standards. We expect this initiative to strengthen the cross-border linkages and facilitate the intermediation of surplus funds within the region. This increase in cross-border flow of funds will further enhance the efficiency in the mobilization of surplus funds to meet the rising investment needs of the region. The implementation of this pilot platform is indeed timely and opportune and, will serve as an important catalyst for further development in linking financial markets within this region. This, I believe, is a development that we should all welcome. Thank you. 2  BIS central bankers’ speeches