In an attempt to maintain growth in the traditional industries, economic policy responded with a series of devaluations. Each devaluation was invariably said to be the final one but the cycle of rising wage  BIS Review 129/1999  2  costs and a devaluation was still repeated again and again. The aim of compensating for the lack of change in Sweden’s corporate sector, which stemmed from the 1960s, simply did not work. If anything, the devaluations meant that the problems persisted and were accentuated. With the lack of investment in new products and the dependence on an increasingly outmoded structure of production, the entire nation’s material standard had to be adjusted. For many years, growth in Sweden was weaker than in the world around us. This example shows how a “new economy” at that time posed problems for the Swedish economy rather than opportunities. The lack of change, because wage formation did not function properly, resulted in an economy that was weaker and more susceptible to inflation. The period clearly illustrates how globalisation, increased competition and new technology can lead to lower growth and higher inflation if changes are not made sufficiently quickly. If the economy is under pressure from strong competition as well as poorly functioning wage formation, economic renewal may lag behind. It is therefore gratifying that the labour market organisations seem to be increasingly in favour of the inflation target policy.
The financing of these companies accordingly imposes different requirements in markets for risk capital and loans. The US markets for risk capital appear to be more highly developed and more focused on the financing of high-risk projects than seems to be the case in Europe, where bank loans predominate and a larger proportion of financing goes to reliable, established firms. With the advent of the euro, the financial system in Europe may become more developed and, like its counterpart across the Atlantic, offer more alternative forms of financing. With a single currency in the euro area, the capital markets will gradually become more liquid and thereby more efficient. There will probably be more corporate financing with bonds and equity, forms of financing that are less common at present in Europe than in the United States. Signs of this are already evident. There is reason to make a deeper analysis of the financial system’s contribution to the changes that are needed in the Swedish economy. The introduction of a single currency may come to play a more important part in this transformation in that it influences the development of Europe’s financial system. This is an argument in the discussion about EMU that I have not encountered hitherto. Conclusion Sweden has already come a long way in utilising information technology. In order to reap the full benefit of this and go on enjoying the combination of high growth and low inflation, it is essential that the right driving forces and conditions are in place.