innovations would not have been possible without the breakthroughs achieved in financial theory, it has been predominantly technological progress that has made the widespread use of these innovations possible. the second factor underlying the structural changes in the financial system and banking sector is the process of financial liberalisation which has been ongoing for some time already. it has allowed an increase in the overall level of competition in financial systems. in the eu, financial liberalisation gained momentum with the single market programme. the single most influential act for banks was the introduction of the second banking coordination directive, which provided a passport for banks to offer services across the european union. liberalisation in the eu financial services sector is already very extensive. what we see now is an ongoing adjustment of the regulatory environment implemented in the 1980s and early 1990s. in effect, it allows other driving forces to have a more profound effect on the financial system. one of these factors, which has been facilitated by liberalisation, is the trend towards globalisation. this trend is occurring in most private sectors of the economy. as companies and individuals requiring financial services are becoming more globally oriented, they demand appropriate financial services. globalisation is expected to increase competition in most areas of financial services, and it may also be able to realise economies of scale and scope. at the same time, globalisation has opened up new markets for banks, particularly in trading, asset management and investment banking activities. finally, the wealth of individuals has increased, and a larger proportion of the population is making portfolio investments. this is partly a result of the ageing of the population, which has, in itself, increased the average wealth of people. at the same time, it is also due to changes in pension systems in a number of countries from a “ pay - as - you - go ” to a funded basis. the prospects for the future are for more of such change, as reflected by the recent proposals for pension reforms in germany and france. the increased number of wealthy individuals has changed the demand for financial services. traditional banking services or products, while maintaining a strong position in liquidity provision, are not adequate for people interested in diversification and maximisation of returns subject to risks in the context of long - term investments. the associated rise in demand for securities has led to an increasing need for brokerage, fund management and consultancy services. while there are new providers for these services, banks could remain at the centre stage, albeit with their services oriented more towards asset management. in addition to the overall increase

point to participation. emu is one important component of the eu cooperation in which sweden is now taking part. from the debate about economic aspects of emu one sometimes gets the impression that an alternative exists which is much simpler, enabling us to avoid all the adjustments which brussels imposes. that is not the case. sweden has experienced a profound economic crisis in the 1990s that was essentially self - inflicted. development in the rest of europe has on the whole been better. we must now in any event continue to consolidate government finance and establish long - term confidence in the stability of swedish economy. this will scarcely be easier outside emu. i find it hard to envisage that sweden would ultimately want to remain outside a functional emu. bit by bit the countries of europe will grow together. this makes the question not whether but when sweden ought to join. perhaps this perspective can help to make the question less dramatic. in our efforts to prepare the financial sector for emu we can see that the work has come a long way. we also meet a strong desire from the parties concerned to get going as quickly as possible so as not to fall behind ; so as to compete on the same terms as other european enterprises and not lose business opportunities. my own experience of eu cooperation prompts the same conclusion. as a “ free rider ” alongside emu it is not just business opportunities that we lose but also influence on european cooperation.