in higher investment in sweden by both swedish and foreign companies. this argument has also been heard recently in connection with some of the relocations of large companies. decreased exchange risks would be one of the reasons. another, it is sometimes suggested, would be that the economic framework for firms would be perceived as more secure and stable if sweden adopted the single currency. once again, the strength of these arguments is difficult to assess, partly because they have evident political purposes. but opinions of this type may clearly have effects if they are current among central decision - makers in the business sector. political arguments favour participation this brings me, finally, to the political arguments for and against adopting the single currency. the calmfors report discussed the implications of participation for swedish policy and its legitimacy, as well as the consequences for sweden ’ s voice in europe and the world. on the first point i shall simply say that i agree about the importance of any decision to participate having a high degree of legitimacy. this in turn calls for an animated discussion of the emu issue. having said that, i shall now concentrate on the other aspect. the report considered that if sweden participated in the monetary union, we would be in a better position to influence eu decisions. the more countries that participated, the greater would be the strength of this argument. the riksbank agreed but found the argument unduly cautious as regards the political advantages. we saw major political benefits from participation and considered that an outsider position would clearly weaken sweden ’ s voice in the european debate and decision - making process. as i see it, since the report was presented and the riksbank submitted its opinion, the political argument has gained appreciable weight. the initial participants number 11, instead of the 6 to 9 countries that seemed most probable to calmfors. that by itself means a great deal. it is a matter of simple logic : if you belong to a club in which 6 out of the 15 members make a move, there is no cause to feel an outsider ; matters are different when 11 members decide on a course of action and support it whole - heartedly, leaving only 4 on the sidelines. it is perfectly clear that emu is a major project – perhaps the most important at present – in the process of european integration. a great deal is being invested in it and the emu process also affects policies in other areas. but let us not exaggerate : experience differs from area to area and sweden ’ s voice

##ksbank did not agree with the report in every respect. the governing board considered, for instance, that it exaggerated the risks of an external shock hitting the swedish economy alone. the board noted that to a large extent the shocks in sweden since the 1970s could be said to have been self - inflicted. the divergent cyclical pattern probably had to do with the direction of economic policy, where strong fiscal stimuli and repeated devaluations had generated high inflation and problems with costs. the board also stated that the report exaggerated policy ’ s freedom of action in reality in an outsider position : it would not be possible for sweden to implement a monetary policy that differed markedly from that in the monetary union. this was evident from sweden ’ s history of uncertainty about government finances and high inflation were sweden to choose the outsider alternative on the grounds of the insurance argument, this could be perceived as a signal that sweden ’ s economic policy would again become accommodating. this risk was also mentioned in the report. the riksbank fully agreed, on the other hand, that unemployment is a serious problem in the swedish economy. but we did not consider that this problem could be resolved by remaining outside the monetary union. as the report had indeed pointed out, other measures were needed to improve the workings of the labour market and wage formation. the riksbank underscored that the necessary structural measures for the labour market would be easier to implement if we had established the credibility of an economic policy for sustainable growth. does the stronger economy warrant different conclusions? in the light of all that has happened in the past two or three years, the assessments presented in the report and by the riksbank should perhaps be modulated. the case for an insurance policy and freedom of action was argued at a time when public finances were weak and unemployment was still at a record level. the measures of economic policy had admittedly begun to build up public confidence in a more stable future after the profound crisis in the early 1990s but the outlook was still uncertain. today the situation is better, with a central government budget surplus and high ambitions for fiscal policy. in both these respects sweden does well in a comparison with euro countries. also, for several years now inflation has been at least as low as in the euro area. it is no less important that a number of urgent institutional changes have been made, with major consequences for the implementation of stabilisation policy. the budget process has been tightened and a new legal framework has been set up