the ap funds'new investment regulations and investments in the premium pension scheme have led to substantial outflows. these flows can undoubtedly have had significance in the short term, although this effect should not be exaggerated. however, the situation in sweden is basically stable, as i pointed out earlier. there is no distrust of sweden pressurising the exchange rate as at the beginning of the 1990s ; no fundamental imbalance in our economy to arouse international concern. one measure of this is the spread between the longterm german interest rate and the corresponding swedish interest rate, which grazed 5 percentage points during the crisis period at the beginning of the 1990s. that was how much more the pension funds in the usa and japan wanted to receive to invest money in the unstable sweden rather than the secure germany. today the interest rate margin is roughly the same and has been so since early 1999. the long - term confidence in the swedish economy appears unshaken and the explanation for the weak krona must therefore be sought in the financial markets rather than the real economy. a floating exchange rate floats! if the krona is undervalued, shouldn't we at the riksbank do something about it? we do have a foreign currency reserve that can be used to buy krona if necessary. however, there is good reason to approach this question with great caution. one important reason is, of course, the above, namely that the weakness of the krona is the other side of the dollar's strength and reflects the international financial unease. we can't do very much about this, no more than can the canadians or australians who are in the same situation. another reason is that we have a price stability target and not an exchange rate target and trying to maintain both with the aid of the repo rate is not an easy task. in many cases the targets are in total conflict with one another. we in sweden have chosen a floating exchange rate and will therefore have to accept that the exchange rate floats. if the riksbank were to intervene on the market now and then, we could easily cause speculations as to what exchange rate we might have as a target. the forecasts as to when the riksbank might intervene and the positions it might take would then become a part of stockbrokers'daily work. this is not a good thing, as it increases unease on the market, rather than reducing it. nevertheless, it should be remembered that every central bank may need to intervene

to and from the ccp. the idea is that because some dealers are likely to be long some trades to one dealer and short some trades to other dealers, passing both sets of trades through a single ccp can reduce the aggregate amount of risk in the system. this would occur as the long trades are netted out against the short trades, leaving only the remaining smaller net exposure of the dealer to the ccp. bis central bankers ’ speeches inserting a ccp in between two counterparties to a trade can also help reduce the “ run risk ” faced by a potentially troubled dealer. as we saw during the crisis, market participants often abruptly pull their trades away from a dealer that they perceive to be weak, which in turn can have the self - fulfilling effect of magnifying market or liquidity pressures on the dealer. if, however, trades with the dealer are cleared through a ccp, direct exposures to the dealer are eliminated and replaced by exposures to the ccp itself. this risk shifting can reduce the incentives to suddenly halt trading with a dealer, for example, due to uncertainty about the dealer ’ s financial condition or future prospects. mandatory reporting of trades to trade repositories is designed to ensure that the details of each contract are preserved and available to the regulatory authorities. finally, the fact that ccps will be central to the system dramatically increases their importance. in essence, global ccps will be systemically important. thus, for the system to be safer it is not sufficient to ensure that trades are standardized and that they are mandated to be cleared through ccps, but also it is necessary that ccps be “ bullet proof. ” they have to have the ability to perform and meet their obligations regardless of the degree of stress in the financial system and even if one or more of their participants were to fail in a disorderly manner. hence, there is a compelling need for tougher principles that are broadly enforced. in addition, to ensure that this all works as well in practice as in theory, the financial stability board, cpss and iosco, and other regulatory authorities have emphasized the importance of four safeguards to ensure that mandatory, standardized clearing through ccps will make the financial system more robust and resilient. the first safeguard is that the oversight of global ccps needs to be cooperative – involving the securities regulators and central banks in the country in which the ccp operates ( the home country ) and the countries for which the ccp may be