This has already been achieved to some  BIS Review 83/2006  3  extent within the EU, but it needs to be achieved on a global basis. Moreover, the coordination and exchange of information must be strengthened both in “peacetime” and during crises. Not surprisingly, I consider it important to implement regional financial stability analyses to detect possible vulnerabilities; the type of analyses now being made in the IMF-led exercise in the Nordic-Baltic region. Furthermore, both the institutions and the public authorities must gain greater knowledge of where the risks end up and what might happen if the ultimate risk-takers suffer problems. The Nordic countries and the Baltic countries Financial integration has come a long way in the Nordic and Baltic countries. There is a close collaboration between the central banks and financial supervisory authorities in the Nordic countries. We have agreements on consultation in the event of crises and we hold joint crisis exercises. As Swedish banks play an important role in the Baltic countries, discussions are under way on the signing of a consultation agreement between the Swedish and Baltic authorities. One important weakness that remains is the unclear distribution of the financial costs between countries in the event of a crisis. A closely-linked but also unsolved issue is which country’s assessment of the situation will prevail and who may decide on measures such as closing a bank.
Are the Danish taxpayers prepared to help pay to save Nordea’s operations in a crisis or do you see it as a problem for the Swedes alone? The question can be reversed, to ask how we Swedes would regard a crisis in Danske Bank. These issues are not unique to our countries; they apply to all countries and therefore require widescale international management. This is a difficult but important issue to discuss – before the next crisis occurs. One means of making this issue more concrete could be to hold a new Nordic crisis exercise based on the conditions in a real bank. It would be necessary in this type of exercise to take a stand on the specific case, which in turn might make it easy to continue a general discussion. Conclusion The crises during the 1980s and 1990s led to many important measures being taken: A number of international standards were adopted to create global minimum standards for regulation and supervision, for instance the Basel Committee’s Core Principles for effective banking supervision. The tasks of the IMF and the World Bank were increased to systematically identifying vulnerabilities in countries’ financial sectors, proposing measures to remedy them and giving technical assistance. The private agents in the financial market have also taken initiatives to reduce risks. They have, for instance, established the CLS Bank to reduce risks in foreign exchange trading.