However, I will in some cases refer directly to the situation in the Nordic countries, with regard to the advantages and also the challenges presented by the far-reaching integration of our financial systems. Introduction An IMF study published a few years ago indicated around 130 financial crises in a fifteen-year period during the 1980s and 1990s; some countries were afflicted more than once. As we all know, we have also had our share of crises in the Nordic countries. Denmark has managed better than the other countries – you had no acute systemic crisis, but a few incidents where individual banks suffered major losses. Many international studies point to the large costs linked to crises – costs to individuals, companies and society as a whole, both direct financial costs and indirect social costs. For example, the crisis in Indonesia cost around 60 per cent of the country's annual GDP. A World Bank study shows that poverty combating in this country was reversed by twenty years. The conclusion is, of course, that it is very important to prevent crises and to manage crises in a way that minimises damage. In my earlier work at the IMF, I was directly involved in crisis management in several countries, but also in the prevention work. My assessment is that many countries have made considerable efforts in recent years to reduce the vulnerability of their financial systems. At the same time, much remains to be done, not least to meet the constant changes in the financial world.
If one wishes to detect problems in good time, before they develop into a crisis, it is important that the public authorities within a country and those in different countries can coordinate and exchange information. There have been large inadequacies in this field in previous crises. This can to some extent be blamed on confidentiality regulations, and the relevance of these may be questioned during a crisis, but in all honesty it can also be blamed in many cases on the authorities having insufficient interest in collaborating. Tendencies in the financial sector The financial sector is subject to rapid development. The borders between different financial activities are being eroded. Banks are selling insurance-like products and insurance companies are selling banking products. In some cases financial conglomerations are being established. Moreover, the trade in financial instruments has developed to such an extent that the risks are spread to a greater number of agents than before and also spread outside of the banks and insurance companies. Another development is the cross-border integration, particularly in the Nordic countries. Danish banks have established themselves in Sweden and Swedish banks in Denmark. Integration as such is a positive development, for several reasons and not least to increase economic growth. The Riksbank therefore supports measures, for instance within the EU, that lead to greater integration. It is therefore important that the authorities manage the risks that integration might entail to avoid setbacks.