The effect of globalization is the establishment of international financial conglomerates. In the case of an economic crisis, the conglomerates may channel it through to other markets. Such companies could be very important for the stability of the financial system in a country or region. Their bankruptcy may evoke a crisis, even in a steadily growing economy and even in the situation when the financial problems have stemmed from a foreign market. The lack of standard procedure for solving problems of international financial institutions impairs prevention and solving of financial crises. The existing safety net established by national economic authorities is frequently a source of moral hazard for large  11  Issing O. “The globalization of financial market”, 2000, www.ecb.int. 12  Lutkowski K., “Mechanizm przepływów kapitałowych w epoce globalizacji” in: ”Globalizacja od A do Z”, NBP 2004. 13  Małecki W., Sławiński A., Piasecki R., Żuławska U. “Kryzysy walutowe”, PWN, Warsaw 2001. 14  Mishkin F.C. “Is Globalization Beneficial?”, NBER Working Paper 11891, 2005. 15  Kamisky G. L, Reinhart C.M. “The Twin Crises: The Causes of Banking and Balance of Payments Problems”, American Economic Review 89, 1999, pp. 473–500. Caprio G., Klingebiel D. “Episodes of systemic and borderline financial crises”, the World Bank , mimeo, 2003. 16  Rajan R. G. “Has Financial Development Made the World Riskier?” NBER Working Paper 11728, 2005.
The background to this is that developments in the euro area in general and in Germany in particular look rather gloomier than they did before. The euro area’s export industry is hampered by international uncertainty, as well as a stronger euro and a weak labour market is affecting households’ consumption and confidence in the future. This means that the international economic prospects look rather poorer now, which was also the conclusion of the Executive Board at its monetary policy meeting on 6 February. However, this assessment is based on the assumption that the Iraq crisis will develop in a way that will not significantly deteriorate economic prospects. Flat growth path for the Swedish economy The financial unease has also affected the Swedish economy. Industrial production has stood still during the autumn and order books have been slow to fill. This is perhaps not so strange in the light of the “wait-and-see” mentality prevailing on important export markets. However, as the international economic climate improves, this and the cyclical pattern for investment are expected to give impetus to industrial production in Sweden. Over the past six months, Swedish households have become increasingly pessimistic in their view of the future, which is perhaps understandable taking into account the negative news with which they are confronted: rising energy prices, higher taxes and expected cuts. The scope for consumption will be under pressure from these factors in the near future.