swedes would not be able to resist the attraction of the euro. as an emu supporter, i can of course see the advantages of the euro, but to believe in a general, spontaneous transition would be going too far. this meant that the idea of a'euroisation'was also a bad argument in the debate prior to the start of the emu. if the swedes are to be won over to the idea of the emu, we should be emphasising the facts. personally, i believe that it will be easier to arouse interest in a discussion based on facts, when the euro banknotes and coins appear next year. globalisation requires stable game rules after this in - depth foray into the world of the euro, i shall return to the more general issues following on from the current internationalisation process. this creates, as i said earlier, the right conditions for a more rapid economic growth, but it does not offer any guarantee that this will be the case and it is important to remember this. the swedish economic crisis at the beginning of the 1990s is still fresh in most of our memories. that experience provided a clear illustration of the importance of pursuing a long - term, credible economic policy. however, it also showed the importance of building up properly functioning institutions to oversee the financial markets when deregulated. in sweden it was evident that the supervisory authorities were not prepared for the reality that would prevail after the deregulation of the credit markets in the 1980s. similar conclusions can be drawn from the crises in for example mexico and asia. these also show clearly that countries wanting to participate on the international capital markets must meet the requirements for openness and provision of information. this is positive, not only because it facilitates access to international capital, but also because the requirements make it more difficult for the governing elite and pressure groups to line their pockets at the expense of the majority of the population, if they want to take part in international society. the crises during the 1990s have also demonstrated that problems in one country can spread to other countries at a much greater speed than before. for this reason, some people would like to see an inbuilt time lag in the markets, for instance by introducing a tax on financial transactions, to reduce the damage to individual countries when capital moves rapidly across borders. this idea is based on most of the transactions on the international financial markets being pure speculation. naturally, there is some harmful speculation that needs to be counteracted

property rights, the rule of law, and the honouring of contracts, must be in place in order for market forces to work and to generate wealth. once this is done, policy - makers have a number of overlapping motivations for further regulation. i'll spend much of my time today talking about the promotion of efficiency. but regulators also act to improve the safety and stability of the financial system, and to protect investors and savers. let me set out three principles that policy - makers should apply in deciding when regulation is appropriate. first, regulation is appropriate to correct a market failure or, to put it in economic jargon, to deal with " externalities. " the second principle is that regulation must be effective. even when a market failure is recognized, regulators should act only if there is a reasonable chance that they will actually address the failure in question. the third principle is that the 1 / 5 benefits of a particular regulation must be greater than the costs it imposes. in trying to solve one problem, regulators must avoid causing even greater problems. with these principles in mind, let me now describe three ways in which regulators can enhance the efficiency of the financial system. the first is to promote competition in domestic and international markets. competition unleashes the forces that drive financial institutions and markets to become more innovative and efficient. that doesn't mean that regulators should " just get out of the way. " appropriate regulation can enhance competition. for example, an important goal of the competition bureau is to prevent firms from unfairly restricting competition. canada became a world leader in promoting competition in financial markets when it adopted many of the recommendations of the porter commission of the 1960s. at a time when policy - makers worldwide favoured extensive government controls on economic activity, particularly within the financial system, porter broke new ground by coming out strongly in favour of enhancing efficiency through the promotion of competition and freer markets. competition is enhanced by expanding the scope of a given market. one way to do this is to have our markets and institutions compete with those in other countries and to have foreign enterprises compete in our markets. therefore, regulation needs to take international considerations and developments into account. i'll have more to say on this point in a few minutes. for now, the point i want to stress is that competition leads to greater efficiency. a second way that good financial system regulation can promote efficiency is by working to correct " information asymmetries " that sometimes occur, and that can lead to