12 Above all in times of financial unease, problems can arise when confidence in the private banks’ money can rapidly collapse. The question is what happens in a financial crisis if confidence in the entire banking sector sinks. Would there be problems if, in the future, it became impossible to switch from commercial bank money to central bank money? Issuing an e-krona is sometimes described as something revolutionary and, in principle, I share this opinion. However, how revolutionary it will be depends, to a great extent, on how the e-krona is designed. If it were to be approximately the same as cash but stored in a card or another physical unit, the consequences for the payment market, monetary policy and the financial system would generally be minor. The more popular the e-krona were to become, the greater the consequences would be, of course: greater competition with depositing in banks and greater risks for the Riksbank’s balance sheet, for example. Careful analysis and calibration is therefore required here. It is also therefore wise to proceed with caution. At the same time, we must stand prepared with a state solution if cash becomes completely marginalised, which could happen quickly. 13 Judicious government intervention in the payment market cannot be consigned to history. In my opinion, the presence of the state will also be needed in the future to allow us to manage the different problems that could arise if state-issued means of payment (banknotes and coins) were to vanish entirely from the payment market.

The Maastricht Treaty impressively illustrates this changed approach with respect to the European area. This new political focus was also a reaction to the disillusionment with regard to the central banks’ ability to generate permanent growth effects. There was fairly widespread agreement that price stability should be the prime monetary policy objective. Second, it was of decisive importance that the currencies of the two leading countries, the US and Germany, achieved a high degree of price stability. Numerous countries gained credibility by pegging their exchange rates to the US dollar and the DM, thus seizing the opportunity to successfully import the stability policies of the Federal Reserve and the Deutsche Bundesbank. Third, the deregulation and globalisation of financial flows have increasingly disciplined the national authorities. These days, an excessively relaxed monetary policy is sanctioned much more severely and much more quickly than in the past by growing inflationary expectations, rising long-term interest rates and a persistent devaluation pressure. Correspondingly smaller are the incentives to run the higher risk of a long-term inflationary problem for reasons of short-term opportunism. On looking ahead, most of these factors promise to remain relevant. Such confidence, however, should not detract from the dangers and risks involved. Fiscal discipline is facing a difficult test phase in a number of countries. It is foreseeable that the combination of demographic trends and non-funded statutory pension claims will lead to intensive discussions on distribution in many places which, in turn, might easily trigger a rise in public indebtedness.