the idea was to keep demand up until international economic activity showed an upturn. another example is the beginning of the 1980s, when activity in the economy once more came out of synch. sweden came out of the decline faster than other european countries by means of two aggressive devaluations, but the cost was that inflation became stuck at a high level. the general council also expressed scepticism, in its comments on the commission's report, of the statement that it would be possible to pursue an individual economic policy in the case of remaining outside emu. with hindsight, one can perhaps conclude that this scepticism was a little exaggerated in that the steering interest rate has been both higher and lower than in the euro area in recent years and the krona has fluctuated substantially. given that a country has systems for both fiscal policy and monetary policy that inspire confidence, there appears to be somewhat better scope for action within the framework of an economic policy aiming at macroeconomic stability than was earlier assumed. sweden and the emu, sou 1996 : 158. the general council of the riksbank's comments 1997 - 02 - 06 with regard to the labour market, it should be clear that the functioning of the labour market and the high level of unemployment no longer comprise as strong a restriction as they did in the mid - 1990s. unemployment in sweden has fallen. several factors have played a role in the decline. one of these is probably the fact that the wage formation system has been changed in a way that contributes to better concordance between productivity and wage growth. nevertheless, there are clear signs that the labour market still comprises a problem area. a clear majority of the eu member states has now joined the monetary union, which was not evident when the calmfors commission made its assessment. the political cost of remaining outside of emu has thus become greater, and public opinion has become more positive towards membership. i personally think that there are also new arguments that should be considered with regard to the costs of remaining outside the union. for instance, the economists andrew rose and torsten persson have made in - depth analyses of the effects on trade of a monetary union. there could be reason to believe that the positive effects are slightly greater than was assumed in connection with the calmfors commission's report. a single currency in the euro zone would remove the foreign exchange risk in around half of sweden's foreign trade, while the other half would in this case continue

with a floating exchange rate, as the euro floats against other currencies. a single currency thus provides less risk and thereby lower costs, which are most important to small companies and private persons. the larger corporations have greater capacity to manage foreign exchange risk, although they would also benefit from a lower foreign exchange risk. what role all of these economic arguments play in the final consideration of whether sweden should join the emu or not depends on the weight one attaches to the economic arguments. the emu question contains so many different dimensions that are more than the purely economic dimensions i have taken up here. a central bank can have an opinion on the economic issues, but should, in my opinion, keep a low profile in the final decision - making. it is clear in any case that sweden has succeeded in recreating confidence in economic policy after the mistakes of the 1970s and 1980s. it is also clear that we, like other countries, need to continue to pursue an economic policy aimed at macroeconomic policy regardless of whether or not we participate fully in the third stage of emu. it is good to be prepared for action with regard to unforeseen events – what is known as asymmetric shocks – whether we are inside the emu or on the outside. there are several ways of achieving this both through strong public finances and a flexible economy. the riksbank will certainly be asked to comment on the economic aspects again, particularly with regard to the commission appointed by the swedish government to investigate the stabilisation policy consequences of emu membership and that will soon present its conclusions. however, the final consideration of all aspects should be made at the political level. a central bank should therefore, in my opinion, avoid any statements that could be interpreted as campaigning. the discussion of the timetable the timetable for a potential swedish emu membership will be decided in the political process. the government bill " sweden and the economic and monetary union " from 1997 states that if the government should decide at a later date that sweden should participate in the monetary union, the question would be put to the swedish population for consideration. the signals from, for instance our prime minister goran persson, indicate that a referendum could be held next year. other political leaders appear to be thinking along the same lines. if the result were to be a " yes ", sweden would present an application to the eu commission and the ecb for an examination of whether we fulfil the legal and economic convergence criteria for inflation rate