The report discusses three models for improving the efficiency of the ECB Councils' decision making in an enlargement of the number of participants in the monetary union: rotation, representation and delegation. That is to say, a rotating voting right between a number of central bank heads, similar to the Federal Open Markets Committee in the USA, the formation of constituencies of central bank heads with joint representatives on the ECB Council, rather like at the Bundesbank following the German reunification, and finally delegation to a small group of experts, roughly like the Monetary Policy Committee in the UK. The CEPR report then gives an account of the advantages and disadvantages of the three models. The discussion will probably intensify when the Nice Treaty comes into force. The roles played by Sweden and the Riksbank Sweden as a country plays an important role in the whole of this enlargement process, because of the support from both politicians and the general public for our neighbouring countries in the east. The Riksbank tries to contribute where we can. We share our experiences regarding monetary policy and financial stability, particularly with the three countries that, like Sweden, have inflation targets; Poland, the Czech Republic and Hungary, as well as, of course, Estonia, Latvia and Lithuania. The latter are particularly important, bearing in mind Swedish banks' large ownership in the Baltic banking system. Economists from the Baltic and central European central banks visit the Riksbank regularly and we visit them.
An even greater risk for both candidate countries and the EU could be to try to transfer the entire system of subsidies and taxes applying in several richer EU countries to central and eastern Europe. Most of the candidate countries already have higher tax levels and a greater degree of state influence in the economy than the majority of countries in the world at their welfare level, and much more so than in countries such as Taiwan and South Korea, which have succeeded in rapidly attaining a higher standard of living. To further increase the tax pressure and subsidy levels would risk subduing growth. 4  BIS Review 9/2002  Here I should like to highlight a warning example and a good example. The warning example is the former East Germany. It is often said that it was the fact that the East German mark was replaced at parity by the West German mark that led to the economic difficulties in the former GDR. This perhaps was not the decisive factor; rather it was the fact that wages and subsidy levels, together with the rest of the West German system, were transferred to a much poorer economy, which needed much greater room for manoeuvre. Despite massive investments, the new eastern länder suffered a recession and mass unemployment.