As such, those emerging in Europe have looked beyond incumbent providers: new entrants and commercial bank providers of clearing and settlement services have featured strongly in their plans. Such providers not only aim to meet demands in terms of flexibility and cost, but also to offer sufficient breadth to deliver a multicurrency clearing and settlement service. Globalisation, regulatory change and the market structure of infrastructure 28 This is part of a general reshaping of the infrastructural landscape in a global market place. Market participants are becoming increasingly international, operating in multiple markets and facing obligations in multiple currencies. Latest international banking data from the Bank for International Settlements revealed growth in excess of 20% in reporting banks’ total cross-border claims in the year to end-Q1 2007, taking the total to $ 29 Banks, therefore, seek infrastructural solutions that will accommodate the international organisation of their businesses. So, while, historically, financial infrastructure has typically evolved along national lines, cross-border alliances and mergers are now more common, both in trading and post-trade: e.g., NYSE Euronext; LCH.Clearnet; Euroclear Group. And alliances in the form of cross-border clearing and settlement links are also widespread, enabling, for instance, securities traded in Italy to be settled and held in an account in the securities settlement system in Germany. 30 Commercial bank providers – namely, correspondent banks and global custodians – may be best placed to meet the demand for multicurrency settlement, leveraging their extensive international connections. This could then reinforce their important position in the infrastructural landscape.

9 Fiscal policy also became much more norm-based than before. There was a need to tighten regulatory frameworks with regard to decisions on state income and expenditure. Several important steps were taken, where the surplus target – the target of a 1 per cent surplus in public finances over a business cycle – is the most well-known. The increased element of “norm-based thinking” in monetary policy has also had clear consequences for the way it is conducted in practice – moving away from detailed regulations and credit allocation to a more “minimalistic” system, where the Riksbank steers the repo rate to attain the inflation target. Long period of economic stability following introduction of inflation target – but loss of focus on financial stability In many respects, the Swedish economy has developed better from the 1990s and onwards. Productivity growth increased substantially during the second half of the 1990s. Possible reasons for this include structural reforms, such as deregulation on several markets and increased use of IT. This development continued until the mid-2000s and the Riksbank was one of several analysts who were surprised by the strength – and resilience – of the growth in productivity. The result was strong GDP growth with low inflationary pressures. The reformed framework for public finances led to a declining trend in the national debt as percentage of GDP. From being regarded as a heavy burden 20 years ago, public finances rapidly developed into one of the Swedish economy’s major strengths.