We shall review this policy from time to time, with a view to further liberalise the rules. 3. The Financial Market Committee (FMC), through an industry-driven effort, is in the final stages of rolling out an operational framework for Foreign Exchange Administration (FEA) compliance. This will be an industry standard that sets the minimum due diligence and list of documents required for FEA. Further to this, a standard summary of the relevant FEA rules to facilitate common understanding and consistent interpretation among market participants is being formulated. It is expected, through this important initiative, there would be better clarity and greater efficiency for the financial institutions and their customers, in undertaking FX and hedging transactions. Taken together, these three measures are targeted at residents such as the Small and Medium Enterprises with a view to expand their access to hedge freely and directly with onshore banks. This flexibility will provide the avenue for simplified processes and flexible hedging activities within prudential limits and incentivise residents to use onshore banks for their hedging needs. These are but first steps. We will be looking at further measures, similar to these. The idea behind these measures is to make our onshore financial market more flexible, facilitative and competitive. In other words, we are deepening the onshore markets towards becoming the main actor to conduct the foreign exchange needs of our economy. This journey will be exciting and require some behavioural changes. But we have no doubt that with the full support of the industry, we can achieve these outcomes.
Moreover, new estimates of the public finances indicate that public consumption this year may be somewhat weaker than assumed in December. This is mainly due to the financial situation of municipalities. The municipal sector as a whole is running a deficit, which must be redressed in the years ahead. One issue that has been debated recently is the effects on the Swedish economy of the weaker dollar. It is true that the dollar’s performance has been weak, but this is not the whole picture. In tradeweighted terms (TCW), the krona has not strengthened recently. This is mainly because the krona quite contrary to what many had expected - rather has weakened slightly against the euro. So for foreign trade as a whole, the currency developments should not constitute any great problem. Another issue of course is if the weaker dollar, primarily in relation to the euro, could jeopardise the revival in the world economy. Neither does this appear likely as long as the adjustment is fairly orderly. As I mentioned earlier, it is probable that growth in Europe will be slowed down somewhat, but on the other hand it is likely to be more robust in the US. Moreover, the most recent data for the National Accounts and foreign trade indicate that we so far rather have been slightly too pessimistic about Swedish exports. The most palpable concern is the labour market, where growth has been weaker than expected particularly towards the end of 2003.