, which in turn should lead to lower interest rates. if a central bank wants to affect interest rates more directly at slightly longer maturities there are various measures at its disposal. central banks such as the us federal reserve and the bank of england are for example buying government bonds with long maturities to influence long - term interest rates in the economy, thereby trying to attain monetary policy easing. however, the effects of such a strategy are uncertain. as yet our experience of that kind of action is rather limited. moreover, government bond rates are affected by many other factors than the central banks'possible purchases of these securities. the riksbank has not taken any such measures. the executive board decided at its meeting in april that the time was not yet ripe for this. but nor could we exclude the possibility that this might be possible further ahead, if the economic situation were to deteriorate more than we were assuming. during our discussion of this type of unconventional measure at our most recent monetary policy meeting i pointed out that the riksbank is already implementing extensive measures through its lending to the banks. these measures will continue as long as is necessary. i also considered that it was not necessarily the case that we would need to take the same measures as, for instance, the federal reserve and the bank of england. there are several different reasons for this. the companies in these countries are more dependent on market funding, while in sweden the banks are the most important source of funding. i also said that we had not yet seen the full effect of the radical interest rate cuts we had made, which contributes to an even greater uncertainty in the question of whether further stimulation through unconventional measures is needed. when we meet in july we will present our forecasts for the economy and the repo rate over the coming three years and discuss once again whether there is a need to carry out other measures than those we have already carried out. we must always maintain the best possible level of preparedness to deal with various situations that might arise. but this is not the same thing as needing to put those plans into action. concluding thoughts i would like to carefully emphasise that what i have taken up regarding economic activity and monetary policy should not be interpreted to mean that in a sudden outburst of uncontrolled optimism i have a much brighter view of the coming period than most others. and my message today does not contain anything new in relation to what i said at the most recent monetary policy meeting. i can assure you that i

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