features that distinguish them from most other developed countries. for a start, they all have fairly large public sectors, as illustrated by the level of public sector employment. compared with anglo - saxon countries, the differences are striking. the large public sectors are the result of a deliberate choice to ensure equal access to certain services like health care. the emphasis on equality and social security also underlies the “ cradle to grave ” public welfare systems in the nordic countries. these systems require large public transfers. both the large public sectors and the high level of transfers necessitate a high level of taxes. in addition, the tax systems have been focused on redistributing income. another nordic feature is the high share of labour union membership. wage negotiations have traditionally been rather centralised and income is fairly equally distributed. there is a risk that these features of the nordic societies weaken both incentives and competition. in that sense, the nordic countries clash with the “ anglo - saxon model ”. however, both the standard of living and other general indicators of well - being are at the top internationally. hence these countries must also possess growth - enhancing characteristics. the most important is probably their openness both to trade and the exchange of know - how. we also like to think that the traditional working ethic of the nordic people is still in place and plays an important role. nordic enterprises have shown flexibility in adapting to a changing market and technological conditions. the restructuring of the financial industry is a relevant example. there are also differences between the nordic economies. one such area is industry structure. sweden and finland both have relatively large manufacturing sectors. they have some major industrial and technological “ locomotives ”, in addition to a pool of small companies. several of these are suppliers to the larger companies. denmark has many small and medium - sized enterprises. perhaps due to location and transport links, denmark is a centre for trade and the location for the nordic headquarters of a number of international companies. the norwegian enterprise sector, on the other hand, is heavily influenced by our natural resources. 3. monetary and financial stability i would now like to address the key objectives of most central banks : monetary and financial stability. what do these two terms mean? monetary stability is interpreted somewhat differently in various countries. the most common definition is price stability - that is to say the stability of the internal value of money. sometimes it is interpreted as exchange rate stability - in other words the stability of the external value of domestic money. finland, sweden and norway all

euro area, the crisis also revealed that the institutional framework of our economic and monetary union – in which the ecb is the central bank tasked with ensuring price stability – needs to be strengthened. the heads of state or government have therefore embarked on reforms of euro area governance, including, for instance, the fiscal framework governing member states ’ fiscal policies with a view to enhancing fiscal discipline. they have also embarked on the creation of a banking union that will centralise critical functions relating to the banking sector at the european level, thereby severing the direct link between sovereigns and their banking sectors that proved to be an achilles heel during the crisis. following the necessary political decisions, the ecb has now started building a banking supervisory function that will be responsible for the direct supervision of around 130 systemically relevant banks in the euro area, as well as for the indirect supervision of banks that are not considered systemically relevant. the ecb will assume this role in november next year and will implement the new harmonised model together with the national competent authorities, whether central banks or non - central bank supervisors. we call this the single supervisory mechanism ( ssm ). this also has implications for eu candidate countries and potential candidates in the western balkans, including serbia, given the role of banks headquartered in the euro area in the banking sectors of the region. the establishment of the ssm implies that for many foreign - owned banks operating in serbia, the ecb will become the “ home ” supervisor and they will no longer be supervised by different national supervisors depending on where they have their headquarters. in addition to enhancing the quality of the supervision of parent banks, the ssm has the potential to facilitate home - host country cooperation in banking supervision – thereby strengthening the relationship between the ecb and the national bank of serbia in this area as well. in parallel, work is underway on a bank bis central bankers ’ speeches recovery and resolution regime, which in our view is a crucial component in severing the link between sovereigns and banks and will be a complement to the ssm. an immediate priority in the euro area is to repair the balance sheets of commercial banks, where necessary. the ecb is conducting a comprehensive analysis of bank balance sheets before assuming the supervisory responsibility and we have made it clear on many occasions that we need to have a european recovery and resolution regime in place by the time the ssm assumes its responsibilities. turning to serbia again, recent developments show that similar challenges apply to the serbian financial sector, where