A Swedish company that raises wages sharply risks being driven out of business. As globalisation continues, new markets are being opened in which wage costs differ from the level in Sweden. Companies get increased opportunities to outsource their activities to countries with lower wage costs. The question is if wage growth in Sweden is competitive in relation to other countries? 4  BIS Review 84/2005  The large surplus on the current account, SEK 48.1 billion during the second quarter this year, equals around 7.7 per cent of GDP and can be seen as an indication that Swedish wages and costs in general are competitive. Otherwise, Swedish goods and services would not be in such demand in other countries. At the same time, Swedish companies have outsourced a considerable proportion of their production from Sweden to reduce costs. The stiffer competition from low-wage countries is found mainly in the manufacturing industry. However, the pace of this production outsourcing has decreased rather than increased since the end of the 1990s. One possible explanation for that is the global economic slowdown at the start of the current decade. Swedish companies give outsourcing as the reason for a lower number of employees to a lesser extent now compared with a few years ago.2 That could also be interpreted to mean that the cost of Swedish labour has fared relatively well after all in the increasing international competition that has resulted from globalisation.
At the beginning of the 1990s, the Bank Inspection Board was merged with the Private Insurance Supervisory Service into Finansinspektionen. In the majority of EU Member States, the central bank and banking supervision are nowadays under the same roof. There are of course other less far-reaching solutions that would be possible if we wanted to improve our Swedish macroprudential policy structure. Regardless of the solution chosen, each has its specific challenges as regards governance and accountability. But having a well-functioning and effective arrangement for macroprudential policy is extremely important for Sweden. What the best arrangement might be is something I hope the Riksdag will reflect on in conjunction with the planned review of the Sveriges Riksbank Act. The time this will take is certainly beyond my active time. My focus is on what is good for Sweden. The whole of Sweden’s welfare is built on the endeavour to increase productivity. This is clearly true within the private sector and it would be strange if this endeavour did not also lead to some form of structural transformation as regards public sector regulation and BIS central bankers’ speeches  9  oversight of the financial system, especially in light of our large, cross-border banks, technological developments and a world of free capital flows unavoidably posing new risks. New but at the same time old issues for monetary policy As I described, a central bank is “the banks’ bank”, not just in financial crisis situations but also on a day-to-day basis.