IT is also a necessary condition for the methods used to calculate financial risks in portfolios of securities or credits. The new Basel Committee rules on capital adequacy in banks, to take an example, are entirely dependent on such calculations. Network effects in the payment system The banking sector in Sweden is, as we know, strongly concentrated. This can raise questions in certain contexts as to how well competition functions. However, the concentration has also enabled, as I pointed out earlier, a more rapid exploitation of network effects and economies of scale connected with IT developments. Let me go into this in more depth, hopefully without becoming too abstract. The development of payment services is governed, just as on other markets, by supply and demand. Supply is affected by costs and technology, while demand is affected by factors such as price, acceptance, comfort and accessibility. Advantages of scale within the production of payment services arise as these services are often connected with high fixed costs and relatively low flexible costs. Building up a new computer system is expensive, but every transaction that passes through the system costs less. The economies of scale effects provide incentive for various types of co-operation and joint solutions, where producers join forces to utilise the economies of scale and spread costs over greater volumes. There are also advantages of scale on the demand side, the in the form of positive network effects. Positive network effects mean quite simply that a particular system becomes more usable the more people who use it.
More than the specific figures in the projections, what matters most is knowing the direction and intensity of the forces driving current dynamics, so we may better identify and gauge the pressing measures needed. The forecasts published by international institutions in recent weeks show that we face a severe global recession. Earlier this month, on 13 March, the International Monetary Fund published for the first time a negative growth rate for the world economy of between 0.5 and 1 pp for this year. A moderate recovery is estimated for 2010, but one still far below what we thought the growth potential trajectory was. Unfortunately, for several months now, each new projection has habitually entailed a notable downward correction on the projection immediately preceding it. It would therefore not be unusual, once the IMF updates its world macroeconomic outlook in a few weeks, that the resulting forecasts should have worsened on those published this month. The outlook for the euro area does not differ substantially from what the IMF anticipates for the developed economies. Early in the month the European Central Bank released what are still the latest projections for the area as a whole, placing growth at between -3.2% and -2.2% for the current year and between -0.7% and 0.7% for 2010. As for Spain, next Friday, repeating an initiative first launched two years back, we shall publish our projections for 2009 and 2010. I shall leave the specific figures for Friday’s release.