The opposite situation is more difficult; when restraint is required in situations where there is a risk that prices and wage formation could get out of control. It would then be necessary to find institutional solutions to help the government and parliament to make the necessary long-term decisions and to do so even in situations where they may be politically difficult and even risky. Here I think it is possible to draw on some experiences of the Riksbank's actions in recent years. Clear targets, transparent analyses and discussions, combined with regular assessments, can put pressure on the political system to take action in time. If you remember, there was doubt at the beginning that the Riksbank would be able to achieve its inflation target. Some people say it is an impossible task. That Swedish politicians will never be able to manage fiscal policy in a responsible manner. I find this rather difficult to understand, although we have negative experiences from the 1970s and 1980s. It is enough to look at two of our three closest neighbours -  2  BIS Review 39/2003  Denmark and Finland. Both have experienced equally severe fiscal policy problems as Sweden, but they now have, as far as one can see, fully-functional fiscal policy regimes adapted to fixed exchange rates. A different, improved budget policy system was also established in Sweden following the crisis in the early 1990s, although this was aimed at long-term sustainability rather than stabilisation, which is only natural with a floating exchange rate.
If, on the other hand, we understand political union as the establishment of an entity that resembles the traditional nation state, the European Union may still have some way to go, if indeed this is the direction that Europeans want to take. Today’s Union is not a European Federation, for example, or a United States of Europe, with a constitution and a single executive. The euro marks the achievement of full integration in the monetary field. In purely functional terms, it is therefore an end point, rather than an intermediate step. However, with the euro, we now form a “Schicksalsgemeinschaft”, a community with a shared future. Our economies are linked, and so our policy decisions have become a matter of concern for all. We have a legitimate interest in developments and political actions in other euro area countries, since we are affected by them - for better or for worse. If I may use a “domestic” metaphor, the marriage in which the euro has joined our countries is about more than just living under the same roof, it is about sharing a common vision and about managing life together. Concluding remarks In the context of the current attempts to help the European Union work smoothly and on a sustainable basis following its future enlargement, I would like to conclude by mentioning the draft Treaty establishing a Constitution for Europe. The process of European integration has delivered half a century of stability, peace and prosperity.