The alternative is, of course, a fixed exchange rate, which in Sweden's case would be synonymous to adopting the euro. In the short term we have managed perfectly well outside of EMU, with lower interest rates and inflation and a higher growth rate than the euro area. However, in a longer term perspective, periods of a wrongly valued krona and major fluctuations in the exchange rate – and we will probably have to live with these – may be a high price to pay. For a small economy with a large foreign trade like Sweden this is a development worth considering. Some conclusions Let me finish where I began, namely by concluding that the economic situation still appears uncertain in essential areas. The main clue is that the American economy will show an upturn, but take a more prolonged path than the V shape. However, there are imbalances that could cause a much less favourable development. In addition, the inflation rate has begun to rise more than expected. There is no sign of improvement in Japan; on the other hand there is a risk of a "cooling down" in the finance sector really taking hold, following an incubation period of ten years. In the longer-term perspective, this may be necessary to put right the underlying problems, but in the short term it may have undesirable effects on the global economy. In Sweden we can see continuing sings of a slowdown.
This slowdown is partly counteracted by a continued weak krona and by the Swedish repo rate being low in relation to the corresponding interest rates in most other industrial nations. At the same time, we can see signs of a high level of resource utilisation and price rises in certain industries. The collective wage negotiations are not yet complete, either. The question of how the threatening international slowdown will affect the Swedish economy in greater detail is still open. It is in this light that one should regard the Riksbank's decision last Thursday, 26 April, to hold the repo rate unchanged. On 15 May the minutes of the monetary policy meeting will be published, enabling a view of the detailed reasoning behind the decision. It will be time for the next monetary policy meeting  4  BIS Review 34/2001  on 30 May. A lot can happen before then and perhaps the economic picture will have become a little clearer by then. BIS Review 34/2001  5