but also because financial instability risks leading to major fluctuations in both the real economy and inflation. we should also take financial stability into account because part of the riksbank ’ s assignment is to promote a safe and efficient payment system. furthermore, in order to adapt monetary policy to the risk of future crises in the wake of financial imbalances we do not need to know that a crisis will actually occur, or exactly when, but we do need to know through what mechanisms or under what circumstances the probability of a crisis increases. nor is it a case of a crisis being the most likely outcome but rather that the risk that something major can happen should make us focus our attention in that direction. 6 if we learned anything from the financial crisis it was that there is every reason to take even less likely outcomes into account. the financial crisis has also reminded us that cleaning up after a crisis can entail huge costs and take a long time. five years after the financial crisis began, for example, unemployment is still high in many of the countries that were hit hardest. 7 with regard to household indebtedness it is obviously the case that monetary policy cannot do much about a high level of debt that in turn is due to high housing prices if these have structural causes, such as insufficient new construction, tax regulations, building regulations and so on. however, the repo rate nevertheless has an impact on the situation of households that purchase housing. experience from other countries shows that a high level of debt can pose risks to the economy, and the level of household debt in sweden is now high in both historical and international terms. apel and claussen this has also been pointed out by michael woodford, one of the riksbank ’ s scientific advisers, in woodford ( 2012 ). for discussions of how the crisis has affected views on monetary policy and the work of the central banks, see for instance blanchard, dell ’ ariccia and mauro ( 2013 ). bis central bankers ’ speeches figure 5 high unemployment following a crisis on the housing market unemployed as a percentage of labour force, index 2007 = 100 ireland ( - 47. 2 % ) spain ( - 30. 8 % ) denmark ( - 27. 6 % ) usa ( - 26. 7 % ) uk ( - 12. 9 % ) sweden ( 0. 0 % ) note. figure in brackets refer to the decline in real house prices from the peak to the trough. source : oecd an article in the monetary policy

stabilisation policy means that a number of important points about emu cooperation are overlooked. they concern the longer run and aim precisely at improving conditions for growth and employment in this horizon. emu has an important role here. trade will be facilitated along with other cross - border activities such as investment. simplified price comparisons can led to stronger competition. we will also have a broader and deeper capital market. moreover, emu implies better conditions for a stable development in the union as a whole. good examples are the crises in asia and russia around 1998 and last year ’ s abrupt slowdown in the american economy ; had it not been for emu, europe ’ s financial markets would have been more turbulent. policy frames in the european union before discussing economic policy in sweden in the event of a transition to the euro, something should be said about the european frames which this policy would have to comply with. these frames already affect the conditions for sweden ’ s policy and will presumably do so even more in the future. of the economic policy processes in the european union, the most prominent are contingent on the stability and growth pact from 1997. the primary purpose of the pact is to ensure that budget policy in the member states is conducted so that no country encounters serious problems with debt because that could lead to costs for the union as a whole and, in the worst case, to other countries being forced to bail out the ‘ sinner ’. the pact contains binding rules and in well - defined extreme cases could even result in sanctions. in addition, there is a number of processes or rules whereby peer pressure and benchmarking are used to speed up the eu ’ s structural reforms. the central policy instrument is the general economic policy guidelines, which can be likened to a budget statement. other instruments are, for example, the luxembourg, cardiff and lisbon processes. all the above applies to sweden, whether or not we adopt the euro, though the terms of the growth and stability pact do differ in this respect ; the rules for sanctions, for instance, do not apply as long as we are outside the euro area. there is much to be said both about the actual construction of the processes and what they have achieved to date. moreover, knowledge of these matters is generally lacking in sweden. today, however, i shall be very brief. as i see it, there is a tendency towards an increased coordination of fiscal and structural policies. this takes many forms. the issues are discussed together, both at the highest level and