. not even this market, which has made a good living from central government financial problems, should be concerned over this. the falling volumes of treasury papers entail new opportunities for other borrowers. " crowding out " will now be replaced by " crowding in ". this should open the way for increased corporate financing with bonds, an area where we have a good tradition. furthermore, an increase in construction should create a greater financing need. it should also be possible to expand the part of the fixed income market that is aimed at households. the fact that the share market does not merely rain blessings has been made quite clear from developments over the past year. a clear and practical system for bonds aimed at households could be one good alternative to both shareholding and interest funds. it is scarcely surprising that the swedish market is markedly different from, for instance, the treasury market in the usa or the bund market in europe. the number of players is much smaller, while the depth of the market is less. this reasonably entails the costs of doing business of the same size being higher and the relationships between players being closer. this carries a risk, particularly in times of uncertainty, of affecting the functioning of the market. the inclination to take on risks then declines and with few players and problems with trading situations, the market has occasionally almost come to a standstill. as you know, there are differing opinions as to whether this type of problem can be solved or alleviated with the aid of electronic trading. i do not intend to become involved in that discussion. part of the positive effects of electronic trading that i mentioned earlier on a more general level will probably be smaller in a market like the swedish one than on a larger market. of course, even in terms of direct operating costs, the savings will be less when calculated in kronor. at the same time, it is clear that electronic trading will involve new opportunities. above all, we hope that it will bring about an increased interest from both swedish and foreign players in being active and doing business on the swedish market. how this turns out will undoubtedly depend on the actions of those in the system from the start. if they choose to limit entry or make it more difficult for new players, there is a risk that the socioeconomic gains with the new platform will not be very great. settlement is important allow me to conclude with a few words on business settlement. this is a question that in itself does not concern the choice of whether or not we

lars heikensten : challenges for the swedish fixed income market speech by mr lars heikensten, first deputy governor of the sveriges riksbank, at the rantevent, modern museum, stockholm, 8 may 2001. * * * the swedish fixed income market has undergone a fantastic development over the past 20 years. this refers to both the volumes traded and the level of sophistication. however, the journey here has by no means been a simple one. at times, both profitability and activity have been quite low. today the market is facing new challenges. profitability appears to have fallen and with it both the number of players and the volumes traded. the risks are now also covered to a greater extent by swedish players trading in, for instance, the german market. the swedish fixed income market has thus lost ground, relative to other countries. it also appears to have lagged behind in the sense of technology. a year or so ago there was an attempt to introduce a new instrument, a swedish fixed income future, with the aim of increasing the market's powers of attraction. this attempt did not live up to expectations, however. today we are gathered here partly because of a new initiative, a platform for electronic fixed income trading. let me start by saying a few words about the way i see the role of the riksbank in this context. our fundamental objectives are to safeguard price stability and promote a safe and efficient payment system. there are connections to the fixed income market in both of these considerations. however, this does not mean that we have an opinion on which system solutions the market chooses as long as they fulfil reasonable requirements for security and efficiency. this area lies outside of our core objectives. this is why we also remained outside of the discussion on a fixed income future a few years ago. given this, i would like to share a few, brief reflections with you. firstly, i shall go through the advantages of electronic trading. my views on this are mainly a matter of principle. after that i intend to make some brief comments on a few aspects of the swedish fixed income market today and in this context say a few words on the consequences that electronic trading may entail. finally, i intend to take up a more specific question, settlement on the fixed income market. we do not consider that this functions sufficiently well from a financial stability perspective. electronic trading, an opportunity let me begin by pointing out that electronic trading systems are being used