There is reason to underline the fact that this would already occur during the ERM2 period, even if the shift in responsibility for  BIS Review 29/2003  3  stabilising the economy from monetary policy to fiscal policy would be a gradual one. As the effects of economic policy are exerted with a time lag, this is something that fiscal policy decisionmakers should already be considering. For the Riksbank, the issue would be to define a strategy for monetary policy in the light of the boundaries imposed by fiscal policy and the central rate and conversion rates chosen for the krona versus the euro. Essentially, it is a question of conducting monetary policy in a way that would make the conditions as favourable as possible for ensuring both the attainment of the price stability target and the objective of holding the exchange rate close to the central rate. This is a pre-requisite if we are to meet the entry requirements, or convergence criteria, of monetary union. From this perspective, it is interesting that the forecasts of the development of the exchange rate and inflation indicate that a relatively stable development for both of these variables is to be expected over the coming years. In ERM2, the Riksbank would still have control over the repo rate. Given the boundaries established by fiscal policy in particular, this should be set with the aim of ensuring price stability, as is the case today. Normally, this should not constitute a problem as regards the exchange rate.
It is important that we have both insight and influence in this process in order to be able to do a good job at the Riksbank and also to be able to contribute to creating the best possible conditions for the Swedish financial sector. 8  BIS Review 29/2003  Finally, I mentioned the Riksbank’s own activities after a potential entry into monetary union. Media interest in the Riksbank would certainly diminish somewhat if we no longer set the repo rate. However, our work tasks and operations would not be affected that much. Most important would be changes in the area of monetary policy. Our perspective would have to become more European, while we would also be an important part of the domestic debate on economic policy. In conclusion, allow me to note that a “no” to the euro would not entail any major changes for the Riksbank’s day-to-day business. I expect that we would continue to conduct our operations in much the same way as before. There is a risk, however, that our significance in the international arena would diminish further. BIS Review 29/2003  9