On the basis of theoretical analyses of what ought to determine a country’s use of a currency, together with information the Riksbank has obtained from interviews and surveys of Swedish firms and households, we have concluded that the introduction of the euro will not appreciably alter the role of the krona in the Swedish economy. The krona has important functions in Sweden’s economy, both as a means of payment and as a unit of account and a repository of value. The krona is already exposed to competition from other currencies. EMU can be seen as a continuation of this process. One indication of the competition is the very sharp increase in exchange market turnover. Since 1986 this turnover has grown by a factor of eight, whereas foreign trade and GDP have no more than doubled. Only 5 per cent of the exchange market turnover stems from transactions directly connected with foreign trade. In what respects, then, might the advent of the euro alter the position of the krona? What is the line of reasoning behind such a scenario? The discussion about a marginalisation of the krona has started from the view that Swedish export companies will choose to switch to euro in order to reduce the competitive disadvantage of being outside the euro area.
By providing another avenue for financing with the development of the corporate bond market, firms are able to improve their ability to balance debt and equity to better manage the degree of leverage while reducing the impact of shocks arising from over-dependence on any single form or source of financing. The development of corporate bond markets in the region has also enhanced the efficiency of capital allocation by providing an avenue for investing one of Asia’s hallmarks - its large reserve of savings arising from trade surpluses. By developing the regional bond markets, it would enable firms to tap alternative sources of financing at competitive cost thereby contributing to increased efficiency, higher investment and consequently to overall growth. The launch of the Asian Bond Fund (ABF) in June 2003 marks the first significant step in regional financial co-operation and integration, and augurs well for the future development of the Asian regional bond market. The Asian Bond Market will not only serve to facilitate the re-investment of a portion of Asia’s reserves back into the region but what is equally important is that it allows for the efficient allocation of savings for productive investments and at the same time broadens and deepens the regional bond markets. In the process, the level of corporate governance in the region would be enhanced as well. Indeed, developing such an alternative source of financing would serve as a more resilient source of long-term financing with improved matching of the currency and maturity profiles of assets and liabilities.