*  *  *  The resurrection of the financial system is well advanced, and the capital base and ownership structure of the new banks have been determined. The next step is to complete the financial restructuring of the savings bank system. The Minister of Economic Affairs has presented a bill of legislation on financial undertakings, which addresses a number of the shortcomings that emerged in their operations during the run-up to the crisis, including large exposures, related party lending, and owner eligibility. A number of projects must be tackled afterwards. The banking system is still too large for domestic needs. Our financial institutions are operating in the shelter of capital controls, and the future arrangements for their links to foreign financial markets are still undetermined. Furthermore, many domestic financial institutions have sizeable currency mismatches between their foreign assets and liabilities. This is risky and increases their need for capital. The financial institutions themselves will have to work diligently in order to reduce the imbalances in their currency composition, but because the hedge market is not functioning properly at present, it is possible that the Central Bank might assist them in repairing their foreign exchange balance through swaps with institutions that have an opposite mismatch. In addition, the Bank will soon review its precautionary rules on financial institutions’ liquidity and foreign exchange balance, in light of recent events. The Central Bank of Iceland has collaborated with savings banks and the Ministry of Finance on a solution to the recapitalisation of the savings banks.
In this spirit the ECB has been reviewing its monetary policy operations over the past year. The enlargement eastwards will entail a new, formative stage. I would gladly work actively to achieve increased clarity and transparency within the ECB if the result of the referendum is a “yes” vote. Is a national stabilisation policy necessary? The risk that Sweden could end up in a different situation from the rest of the euro area, and that this would cause serious economic policy problems, has been strongly highlighted in the Swedish discussions, much more so than in other countries where the monetary union has been discussed. The reason for this is, of course, the severe crisis that occurred at the beginning of the 1990s, with the collapse of the krona in 1992, which had such a tangible effect on the lives of many in Sweden. In my opinion, there is a tendency to overestimate the risks that developments in Sweden will differ substantially from the rest of the world and require unique stabilisation policy measures. When we have differed from other countries previously - such as during the crisis years of the early 1990s - this has usually been the result of conducting a different economic policy; of not having control over inflation or focussing on stability, as the core EMU countries did. However, there now appears to be a consensus that economic policy should be aimed at long-term stability and that this policy should stand firm.