is needed in the old ones. the old countries in the eu have presently a highly unfavourable demographic situation, as previously broad age groups are retiring and the base of active people to support them is being reduced. in sweden today, each person in the active population supports 0. 29 people over 65 ; by 2030 this ratio is estimated to have risen to 0. 42. the corresponding figures for italy and belgium are even more alarming. one way to reduce the dependency burden and increase the labour force is to try to get people that are unemployed, sick or in early retirement back to work. historically, however, the most reliable way to steadily boost the labour force has been immigration, as has been the case in the united states, for example. experiences and studies also show that people with the most advanced qualifications and best training most often have the greatest incentive to move, partly because the wage differential is bigger and partly because they find linguistic and cultural barriers easier to overcome. so to consolidate the welfare in the old countries, an increase inflow of highly qualified labour from the new member states would be desirable. the question is whether this is not correspondingly a disadvantage to the new member states. they have a somewhat different demographic situation, their dependency burden is lower today, but will later rise sharply and in several countries exceed italy ’ s or sweden's in 20 - 30 years. there is also a risk that it would be the best - qualified labour that would emigrate first. meetings in a broader circle having considered these prospects, i would like to provide an insight into how the enlargement changes the functioning of the eu. the riksbank participates in a large number of eu committees. i myself am a member of the economic and financial committee ( efc ), where senior officials from the finance ministries and deputy governors of the central banks in the eu discuss economic issues. the fact that there are now 25 countries instead of 15 and therefore considerably more at the table implies changes, of course. on the one hand, there is less scope for each country - the central banks, for example, don ’ t participate as often in the efc after the enlargement and the speaking time per person places greater demands on concise, brief contributions. on the other hand the discussion has been vitalised by the new countries, which in some ways are less bound by tradition and which have new angles of approach, sometimes for the simple reason that many leading decision - makers in the new member

it applies, for instance, to methods for estimating such central variables as how many unused resources there are in the economy and how great the potential growth can be. different methods then produce different results. the ecb is an example of a central bank that builds up its analysis from the real side and from the financial side - monetary policy rests on two pillars. there are partly historical reasons for monetary policy strategy being conducted in this way. their strategy is perhaps not the best way to take financial trends into consideration. the risk with such a clear division is that the fact that it is actually about mirror images is disregarded and that the consistency between the real and financial analysis is lost. the advantage is that financial trends can clearly be taken into consideration when monetary policy decisions are made. in the second place, we can make different appraisals of the risk picture for the price trend during the forecast period. as there is normally great uncertainty in the inflation assessment of the main scenario, the riksbank also produces risk scenarios ; we also publish estimates of the probability distribution of different inflation outcomes. the distribution around the probable outcome is taken into consideration when decisions on the interest rate are taken. in the third place, we can make different assessments as to how monetary policy is to be conducted to strike a reasonable balance between fluctuations in growth and inflation. as i mentioned earlier, the executive board has agreed that we can decide not to bring inflation back to target within one to two years if cpi is affected by temporary factors or if the economy is affected by extensive disturbances. making assessments and evaluating when - within these frameworks - there are sufficient reasons for avoiding output variations by extending the control horizon is far from self - evident, however. to maintain the credibility of monetary policy aimed at price stability, it is important therefore to justify such departures. in the fourth place - and i am now starting to sound as if it is not at all possible to conduct monetary policy with a demand for clarity - we do not know exactly the stimulation or tightening produced by a particular interest rate. this depends on our, like everybody else ’ s, limited knowledge of the “ transmission mechanism ”. it is also due to it being difficult to exactly define at what real interest rate, monetary policy has a neutral effect on demand. the difficulty is increased by the “ neutral ” real interest rate changing, for instance when the productivity growth in the economy changes. on the basis of experience, simple rules of thumb and rough calculations, everyone can per