This was evident from Sweden’s history of uncertainty about government finances and high inflation were Sweden to choose the outsider alternative on the grounds of the insurance argument, this could be perceived as a signal that Sweden’s economic policy would again become accommodating. This risk was also mentioned in the report. The Riksbank fully agreed, on the other hand, that unemployment is a serious problem in the Swedish economy. But we did not consider that this problem could be resolved by remaining outside the monetary union. As the report had indeed pointed out, other measures were needed to improve the workings of the labour market and wage formation. The Riksbank underscored that the necessary structural measures for the labour market would be easier to implement if we had established the credibility of an economic policy for sustainable growth. Does the stronger economy warrant different conclusions? In the light of all that has happened in the past two or three years, the assessments presented in the report and by the Riksbank should perhaps be modulated. The case for an insurance policy and freedom of action was argued at a time when public finances were weak and unemployment was still at a record level. The measures of economic policy had admittedly begun to build up public confidence in a more stable future after the profound crisis in the early 1990s but the outlook was still uncertain. Today the situation is better, with a central government budget surplus and high ambitions for fiscal policy.
If Sweden chooses to remain outside, it will ultimately be difficult to get the participating countries to understand our actions. The fact that the monetary union is a major component of a larger process of integration means that we cannot expect to get simple answers to our questions by adopting an attitude of wait-and-see. Assessing the project over a complete business cycle certainly has its advantages but the prevailing uncertainty is costly. Investments are postponed or shelved. Twin systems have to be maintained. I am convinced, moreover, that new questions will arise all the time. We shall never be able to tell just how EMU will develop. This is something that those who participate decide as they go along. In the event of turbulence in the world around us, participants in the euro area have extra protection. This was evident last autumn, when the financial market turbulence hit the Swedish krona more heavily than the Finnish markka. On the other hand, as euro participants we would be in the same boat as at least eleven other countries. That naturally implies greater dependence – we would be clearly involved in problems that arise in the euro area. The only way to counter that would be by actively influencing developments in the euro area in the right direction. An insurance argument can be put for remaining outside the euro area. If we continue to manage the economy properly, there should be freedom of action in our economic policy. But this is not a simple matter.