to avoid negative effects of a change in the exchange rate, the exporter can enter into a futures contract that establishes the rate at which the future income will be exchanged to the exporter's own currency. these opportunities for risk management have crucial economic importance. without them, many economic projects would be perceived as too risky and would never be realised. and this would lead to a slower development of the economy. deregulation and the rapid developments in technology and finance have made it possible to transfer these roles to the international stage on a much larger scale than before. thus, the financial markets'capacity to contribute to increased global growth has been strengthened. countries importing capital can increase their rate of investment and gain access to more modern technology, while the countries exporting capital can obtain a higher yield on it. many people have claimed in this context that companies in countries, which have recently deregulated their capital markets, have a tendency to take on more loans than they can manage. this does not appear to be the case. on the contrary, empirical research indicates that while non - financial companies with access to the international capital market increase their borrowing, their equity increases at the same rate. it also appears that these companies increase the duration of their loans. in this perspective, it is difficult to imagine that the risk of taking out excessively large loans increases as a result of deregulation. the various types of funds managed by many of you make a contribution to this, by supplying share capital to companies in other countries. economic policy content of crucial significance allow me to return to the criticism of developments on the financial markets. as i said, it cannot be dismissed out of hand. it is evident that there are some problems in the way these markets function. one only has to look at the mexico crisis of 1995 and the asia crisis of 1997 - 98 to see that. it is, however, important to remember that the origins of the crises lay in domestic problems in those countries that were hardest hit. in asia, as was the case here in sweden at the end of the 1980s, the countries developed a financial vulnerability through rapid credit expansion, over - investment in certain sectors, grossly inflated asset prices and short - term borrowing abroad. this borrowing was in turn channelled via domestic banks into projects with long - term funding. when foreign and domestic investors began to show concern over uncertainty regarding the growth potential of these countries, the course of events moved rapidly. this development shows how a misdire

function entirely without problems. at times, there has also been considerable criticism of the players on the international financial arena. although this may sometimes be warranted, unfortunately it all too often stems from the opinion that financial operations are a bad thing. i have therefore tried to describe today the tasks carried out by the financial system in society. these not only make our daily life easier, but also provide a crucial contribution to economic development. it is therefore important that our solutions to the problems we see in the financial system do not destroy these welfare - creating mechanisms, but instead contribute to reinforcing them. for the same reason, it is important that countries pursue a good domestic economic policy. sound government finances and sustainable price stability, combined with structural reforms that increase the flexibility of the economy, will reduce fluctuations in exchange rates and capital flows and thus increase the financial markets'capacity to contribute to the development of the economy. thank you.