##estr should replace stibor – the riksbank will play an active part in this work so to summarise, my message here today is this : the reference rates that have been dominant for several decades have clear flaws, and this is true both internationally and in our own swedish financial market. due to the riksbank starting to provide swestr for the swedish market, there is now a robust and reliable alternative to stibor. so there are good reasons to start the transition from stibor at its shortest maturity ( stibor t / n ) to swestr as soon as possible, in line with international developments. it is not work done from one day to the next, but it is a job worth doing. in the longer run, it should also be possible for swestr to replace stibor at longer maturities. the riksbank will support this transition in various ways. our goal is that the dominant reference rate in the swedish financial market shall be of the highest international standard and that requires both support from us as authorities and a high level of ambition among the various market participants. thank you for listening. i look forward to your questions and comments. tomorrow - next refers to a deposit from the next business day to the following business day. the riksbank collects data both on short - term money market transactions in swedish kronor and on other transactions that may form the basis of stibor. transactions under ten million kronor do not have to be reported. in the euro area, the old eonia reference rate still formally exists, but was redefined a few years ago as the new reference rate of €str plus a fixed premium. the nine monetary policy counterparties that currently report their swestr - relevant transactions on a daily basis are handelsbanken, swedbank, seb, danske bank, dnb, skandiabanken, lansforsakringar bank, sbab and nordea. 8

jurgen stark : emu – weathering the perfect storm speech by mr jurgen stark, member of the executive board of the european central bank, at the german - british chamber of industry & commerce, london, 25 june 2009. * * * the economic crisis – where do we stand? let me start by saying that none of my remarks should be interpreted in terms of the future course of monetary policy. indeed, we are in the one - week “ purdah period ” before the next governing council meeting. the world economy is facing its most severe crisis for 80 years. but why are we in this position? what have been the driving forces behind the dynamics of the crisis? several forces have been at work : a combination of macroeconomic factors and significant deficiencies in the regulatory and supervisory architecture prepared the ground for this crisis. more specifically, expansionary macroeconomic policies over a protracted period of time allowed financial imbalances to build up at the global level in the context of globalisation, financial liberalisation and a lack of regulation. at the same time, complex financial products flourished, with investors on the hunt for ever higher yields in the presence of robust economic growth, low inflation, low interest rates, low default risk and ample liquidity worldwide. in particular, the expectation that this favourable environment would continue for some time prompted investors to systematically underprice risks in their search for yields. thus, instead of contributing to better risk diversification, these new financial instruments simply disguised those risks. we were aware of these imbalances. there was no shortage of early warnings. as long ago as 2005 the ecb warned of the excessive growth of credit. there were also warnings on the other side of the atlantic that the us economy was skating on thin ice. 1 these concerns regarding the lack of political will to remedy this unsustainable situation proved to be extremely prescient. however, such early warnings went unheeded. in august 2007 the concerns that many people had been harbouring for a while were abruptly translated into financial turmoil. the problems first emerged in money markets, with banks preferring to hoard cash rather than lend to each other because they feared that their counterparties would not be able to repay them. the situation deteriorated following the collapse of lehman brothers last september. the financial turmoil then quickly turned into a full - blown financial crisis, with adverse effects on the real economy and negative secondround effects on the financial system. this has led to the most severe and sync