For Swedish banks and financial institutions, the difference as regards participation in central bank monetary policy operations will probably not be all that great. The Riksbank will no doubt continue to be the financial sector’s counterparty. The main differences from today for Swedish banks are that the overnight market will be considerably larger and that minimum reserves are likely to be required. How monetary policy is to be constructed and implemented in detail has still to be decided. These matters will not be finalised until the ECB has been established next year. Thus it is the countries which participate from the start that will be in a position to influence the conduct of policy as well as the organisation of the work in the new European bank. There are already tendencies for countries belonging to the “presumed” core to exercise a greater influence over the process. 2. Payment system A single monetary policy calls in turn for a common payment system in order to handle the payments connected with the policy’s implementation. The arrangements whereby all the national systems are interlinked is called the Target system. In the new system, a cross-border payment will normally be made in a matter of seconds, whereas at present in the best case it takes a whole day. The main objective of Target is to enable the ECB to implement monetary policy but the new system will also provide a new “highway” for commercial transactions.
Wage costs in Sweden rose considerably faster than in other countries in the 1970s and 1980s; competitiveness was restored by resorting to devaluations. It is not self-evident that shocks generated externally would hit Sweden more seriously than countries which are currently taken as given for EMU. So the risk of what economists call asymmetric shocks in Sweden should not be exaggerated. Moreover, when it comes to influencing production and employment in the event of major shocks, monetary policy has a limited capability. It may even be the case that independence in monetary policy increases the risk of self-inflicted shocks. In the longer run, monetary policy is not a substitute for the changes that need to be made, for instance to improve wage formation and the workings of the labour market. The Governing Board of the Riksbank will shortly be submitting an opinion on the Calmfors report. The arguments for and against EMU participation will be considered there at greater length. A general theme in the report is that every kind of decision - to joint now, to join later or to stay outside - entails risks and has a price. Although the report conclude that Sweden should wait joining EMU for the time being, not much is needed to tip the scales the other way, for example if EMU begins with more participants than the core countries or if the alternative of remaining outside does not confer any substantial freedom in monetary policy. But as I said, there will be occasion to return to this.