size of the eu to see that the consequences and the disruption would be much more significant for the smaller part in that negotiation than for the eu as a whole. i don ’ t expect and no one is expecting that a brexit will mean that there would be no trade between the two parts. that won ’ t happen. there will not be a total disappearance of trade. mr constancio, you are in this position since 2010. so, you experienced the hardest times of the eurozone. what was your personal most difficult moment? well, it was the start of the phase of the crisis when greece came to a situation where the revelation about the budget deficit created a situation of non - access to the financial markets. that was in 2010. could you say that the end was close? well, i wouldn ’ t say that especially with hindsight but during those moments, indeed it was the first big shock of the crisis. then we had many other vicissitudes later on, some related with greece, some related with other countries, 2015 was also a difficult moment but the beginning and the big shock and the surprise of what could imply was indeed the more difficult moment. mr constancio many thanks for being with us. 2 / 2 bis central bankers'speeches

conversion rate a premise when setting the swedish krona's central rate in erm2 is that this will also be the conversion rate for joining the monetary union. having said that, i want to emphasise that there are no absolute criteria for which central rate or final conversion rate that is most appropriate. what we can do is use various models, expert knowledge and common - sense to try to narrow down a reasonable interval and analyse the consequences of different choices. the real exchange rate is a natural starting point a central concept in this context is the real exchange rate. in contrast to the nominal exchange rate, which is the relative price of different currencies, the real exchange rate is the relative price of groups of goods. more specifically, the real exchange rate is defined as the amount of domestic goods that has to be provided in exchange for a given amount of goods from abroad. the value of the real exchange rate is calculated in practice as a quotient, the denominator being the product of the nominal exchange rate and an appropriate price index for foreign goods and the numerator the corresponding domestic price index. the real exchange rate is commonly regarded as a measure of a country's international competitiveness. the weaker the real exchange rate - the more domestic goods that are needed to balance a given amount of foreign goods - the cheaper it is for firms and consumers abroad to buy swedish products : our competitiveness is stronger. it follows that the real exchange rate is a measure of purchasing power ; the weaker the real exchange rate, the smaller the amount of foreign goods that can be bought for a given amount of domestic goods. this needs to be kept in mind when discussing what are appropriate central and conversion rates. a weak rate can admittedly confer competitive advantages but it also means that people in sweden are poorer. sweden's full participation in the monetary union locks only one of the components of the real exchange rate - the nominal exchange rate. so the real exchange rate will continue to fluctuate and from time to time the rate of inflation in sweden will deviate from the emu average. there is nothing odd about that. the ecb's inflation target, a rate below 2 per cent, refers to the average rate in the monetary union as a whole, not the rate in a particular region or country. in another major monetary union, the united states, the regional differences in rates of inflation have at times been large. studies show that differences in annual rates of inflation between