in the euro area, which i always supported. the ecb fostered it with its welcome proposal on the recognition of badwills. but beyond domestic consolidations in some jurisdictions where it is not yet entirely done, we need more cross - borders ones ; it should be part of a real banking union. on markets, let ’ s be clear : there will not be a single city for the continent, but rather an integrated polycentric network of financial centres, with specialisations based on areas of expertise. a polycentric system of this nature can clearly function, as illustrated by the united states : new york ’ s financial centre is favoured by corporate and investment banks, chicago ’ s financial centre handles futures, while boston specialises in asset management. likewise, paris is well qualified to become the “ market hub ” of this new european constellation. france will be the biggest capital market in the eu on the other side of brexit. according to a recent study by the british think tank new financial, it will take the lead in the eu in 14 of 30 sectors studied2. this polycentric structure would improve the circulation of the abundant savings in the euro area – a surplus amounting to eur 360 billion last year – channelling them towards financing needs on the continent. besides, euro area businesses have been lacking equity financing for many years now. the capital markets union – and what i more broadly call a “ financing union for investment and innovation ” – is even more essential given the prospect of brexit. european governments all agree in principle ; but so far it remains a blind spot in the recovery strategy. let us at last turn words into action. ii. preparing europe payments for the digital currency age payments are not a usual topic for europlace and distinguished financial forums. indeed, they used to be considered as technical, back - office and even boring stuff. but a revolution is underway, and if we collectively miss it, it would mean a massive disintermediation of banks in the two key assets linked to payments : daily customer relations, and personal data. and it would also mean a major loss of sovereignty for europe. to this day, the coexistence and complementarity of central bank and commercial bank money as settlement assets has structured the payment landscape. yet this structure is increasingly being questioned. the development of cheap and innovative digital payment solutions is leading to a decline of the use of cash in transactions, and an increase of cashless payments, which

to the banking system. we produce regular analyses and reports on such matters in our six - monthly stability reports. as far as the work with price stability is concerned, we must take into account the effect that house prices have on household saving and consumption decisions through their impact on wealth and thus the level of demand in the economy as a whole. for households with debts, the scope for consumption is also affected by interest rate adjustments if the share of income used for interest payment changes. accordingly, we take this into consideration when we make our inflation assessment. there has been a swift increase in household debt and house prices over a long period. one potential cause of concern, which we cannot disregard, is that if this trend continues at the same rapid rate, a situation could develop where, at a later date, there is a risk of a considerable slowdown in growth and employment as a result of households finding themselves compelled to increase savings owing to a heavy debt burden. the risks involved here are very difficult to quantify in forecasts or pinpoint in time, but could none the less be a threat to macroeconomic stability. inflation could then also revert to a state that might prove difficult to deal with. however, it should be underlined that the likelihood of such a scenario arising is regarded as slight, in particular when we have identified it in good time. we have taken these factors into consideration even if they have not been crucial for our monetary policy decisions. the riksbank does not have a target for the krona exchange rate. however, since the exchange rate is one of many factors affecting growth and inflation, we must naturally take the path of the krona into consideration in the inflation assessment. the exchange rate affects inflation directly and generally relatively quickly through prices of imported goods and services. the exchange rate also affects inflationary pressure indirectly and usually with a long time lag, by its impact on the level of activity. a weaker krona entails, everything else being equal, greater demand for swedish goods and services, which in turn leads to an increase in resource utilisation. the exchange rate can also affect inflation expectations indirectly. i would now like to move on to inflation prospects and monetary policy. in the december inflation report, we made the assessment that international growth would be good this year and in the next few years but would slow down somewhat. new information prior to our january meeting suggested that development would be stronger than expected. this applied primarily to the euro area and asia while the latest