banks lose on the swings, they may regain on the roundabouts. the banks ’ pricing can take into account risk classes and collateral, but there is not always a direct connection between prices and risk classes. however, developments in regulations and on the capital market favour a stronger connection between interest rates on loans and risk classification of the borrower. the banks ’ credit assessment procedure is not a static process. the major swedish banks currently have well - functioning organisations, methods and systems for assessing loans and managing credit risk. developments in financial theory and rapid advances in it over the past decade have created new and improved conditions in this field, and the banks have made good use of this. as a borrower it is important to be aware that the individualisation in the modern credit granting process has also been taken up in the shaping of the new capital adequacy rules, where it will be possible to price loans more fairly. why do we have capital adequacy rules? as the banks play such a central role in the payment system, and the costs of disturbances in the system and in the credit market would be very large and have to be borne not only by the borrowers and lenders, but by society as a whole, the banks have long been subject to scrutiny and oversight with regard to their risk - taking. since 1988 we have had an international agreement, the basel accord on capital adequacy rules. this involves, in simple terms, regulations as to how much capital a bank must hold with regard to different borrower groups for each hundred krona it lends out. it is much more costly for the banks to finance themselves by holding their own capital than through borrowing, just as for other companies. a higher capital adequacy requirement for taking bigger risks will thus lead to the banks being forced to charge more for lending money to higher risk borrowers. this is a regulatory system that is used by 120 countries and it contributes to financial stability around the world. however, the current capital adequacy rules from 1988 are divided into 4 fairly rough risk classes, which do not very well reflect the risk with various borrowers. for instance, the risk classification means that all companies are in the same risk class, despite the fact that they can differ markedly from one another. there has therefore been intensive work on further developing these rules by the basel committee, in which both the riksbank and finansinspektionen ( the swedish financial supervisory authority ) participate

jean - claude trichet : the euro after two years : european competitiveness in a globalized global world speech by mr jean - claude trichet, governor of the banque de france, to the swedish national committee of the international chamber of commerce, stockholm, 6 april 2001. * * * ladies and gentlemen, it is a great pleasure and an honour for me to be invited to speak at this meeting of the swedish national committee of the international chamber of commerce, today in stockholm. i am particularly happy to express my views on the already successful existence of the euro and monetary union, and the conditions and prospects for its further success. as you all know, within nine months, on 1st january 2002, the euro will become a reality across europe as euro banknotes and coins are introduced. this will be the largest monetary change over the world has ever seen. however, it should be recalled that for all economic, monetary and institutional purposes, monetary union was created on 1st january 1999. then, a decisive event in the history of europe occurred. the euro was born and the irreversible nature of this change has convinced an increasing number of economic players that the success of the euro is necessary for europe. it is a keystone of the european single market, which will ensure prosperity in europe for the benefit of the rest of the world. i would like to draw your attention to why the euro and monetary union have been successful from the outset, and to the conditions and prospects for building on this success. i. the euro and monetary union are based on a credible monetary policy and contribute to an appropriate economic and monetary equilibrium in europe i. 1 a credible, stability - oriented monetary policy a / first of all, let me point out that, from a technical and operational point of view, the launch of the euro on financial markets has been an indisputable success. in this respect, one has to remember all the doubts voiced three years ago. the decentralised organisation of the eurosystem has achieved the objectives it was assigned in three important respects : – operational efficiency, as is demonstrated by the timely adjustment of banking liquidity and steering of short - term interest rates ; – the security provided by the procedures and systems implemented by the eurosystem, both for the execution of its operations and in the field of large - value payments. at the shortest end of the market, the integration of the interbank market took place in 1999, right from the start of monetary union, thanks to