turn for a common payment system in order to handle the payments connected with the policy ’ s implementation. the arrangements whereby all the national systems are interlinked is called the target system. in the new system, a cross - border payment will normally be made in a matter of seconds, whereas at present in the best case it takes a whole day. the main objective of target is to enable the ecb to implement monetary policy but the new system will also provide a new “ highway ” for commercial transactions. the extent to which banks and other enterprises use the system will probably depend on the price. all the national central banks in the eu area can join target, whether or not their country is in the euro area. but there is a considerable risk of countries outside the euro area being in a worse position, for instance due to restrictions on intra - day borrowing in euro to counter fluctuations in the payment flows. we have vigorously opposed this threat of discrimination but the issue, along with others, has been deferred and will now be decided by the countries that join the euro area from the start. 3. legal framework a clear legal framework for the euro is essential. economic values, for instance in contracts, bank accounts and pension agreements, must be guaranteed during the changeover period from 1999 to 2002, when the euro and national currencies will exist side by side. the so - called continuity of contracts is regulated in one of the euro statutes but amendments to national laws will also be needed. another legal issue concerns the national central banks. as regards the riksbank, the maastricht treaty calls for a more independent statutory status. this means, for instance, that the status of the governor must be clarified ; grounds for his or her dismissal will have to be explicit, e. g. serious misconduct, etc. neither will the riksbank be able to accept directives, except of a statutory nature, from others, e. g. the government. the composition of the governing board may be a problem ; the appointment of members of parliament to the governing board runs counter to traditions in central europe. 4. debt conversion and issues the countries that join the euro area may - and it is also envisaged that they will issue treasury paper denominated in euro. a member state wishing to convert its stock of debt into euro will be allowed to initiate the appropriate measures. a member state may also take steps whereby private issuers and marketplaces ( e. g. the stockholm

planned for the coming years, according to government decisions that have already been approved, exceed the expenses permitted as per the fiscal rule by nis 12 billion in 2013, nis 22 billion in 2014, and nis 25 billion in 2015. we must remember that this is the situation after the government took the very rare step of raising vat and direct taxes a short time before elections, and this is a very responsible step from the standpoint of the government. at the beginning of 2013, the government will operate based on the 1 / 12 rule due to the fact that the budget has not yet been approved. however, the law also takes into account expenditure on debt repayments, which were very high in 2012 and are expected to be lower in 2013. therefore, we do not expect marked restraint as a result of the 1 / 12 rule. revenues are projected to be below the expenses limitation. therefore, the government will need to close a gap of more than nis 12 billion in 2013. so what will the government do? the limitation on the budget is a law, which can be changed. i hope that the government does not change this law, since we are coming close to an expenditure level of 43. 5 percent of gdp this year, and we must maintain a safety margin in case of a security crisis. the government will therefore need to reduce the level of planned expenditure, and we obviously must remember that there will still be an increase of about 5 percent in expenses in 2013 over 2012, due to inflation adjustments. but the planned expenses are supposed to increase by 10 percent, and this is even before accounting for the ramifications of operation “ pillar of defense ” with the ministry of defense. i would not want to trade places with the person who will need to explain to some of the public that “ we promised, but we didn ’ t promise to carry it out ”. but that is the work of the politicians. the government will need to decide what to do, and it will be very difficult. if i had to choose, i would prefer that the government meet the deficit target as well as the expenditure rule. however, if it is necessary to change the expenditure rule and to increase it, which is not desirable, i prefer that this be done through an increase in taxes and a significant reduction in the deficit, preferably even to slightly below 3 percent. it is not recommended to delay these decisions. the tensions within the government will only increase as we move farther away from the