should default. this applies for amounts of up to sek 250, 000 per customer and institution. it is only if the deposit has been made by another financial institution or in some cases if the amount is frozen that the deposit guarantee does not apply. this reasoning concerned what we could do in a situation where financial stability is threatened. some central banks have recently been forced to take this type of measure. but none of the swedish banks has had problems with its liquidity in the way i described in my example. so how do we view the current situation? recent developments as i mentioned earlier, the financial turbulence has been included in our analyses for some time now, both with regard to monetary policy and financial stability. the riksbank has regularly emphasised many of the risks in the financial system and what could happen if the financial turbulence should grow worse. the riksbank bases its assessment on an analysis that focuses on the four major swedish banks, as they account for around 80 per cent of the market. the swedish banks have considerable equity, good profitability and limited loan losses. our assessment is that there is a high degree of resilience to the international turmoil that has prevailed for some time now. but this is not the same as saying that the swedish financial markets and banks are not affected by the situation. of course they are. the financial markets have been affected more noticeably the international markets where the banks obtain funding by taking out bond loans have been functioning poorly. borrowing has become more expensive and more difficult. normally the financial market participants trade with one another and thus contribute to the smooth functioning of the market. however, recently above all mutual distrust has meant that they are more wary of lending money to one another. one can say that this has “ thrown sand in the wheels ”. many central banks and other government agencies are trying to counteract this, as i will discuss shortly. this has also affected the swedish banks, although the problems have been less serious here than in many other parts of the world. we can observe that short - term interest rates have now risen substantially in sweden, too. this applies, for instance, to the interbank market, which is the market where the banks borrow money from one another to cover their short - term liquidity needs. however, in this context it is worth pointing out that the overnight market has functioned as usual and that the overnight rate, the shortest interest rate in the economy, has remained stable around the repo rate. in this way the

step backwards. i do of course realise that it is unrealistic to ask for the creation of an international institution with supranational powers to deal with distressed cross - border banks. so, in the absence of a common global regime the best we can do is to try to develop a common international approach to crisis management and resolution. if we cannot do it as one, at least we need to make sure that we can do it similarly and in a coordinated fashion. so we need to embark on an even bolder agenda than the present supervisory reforms. here, we may draw some inspiration from the last century. after the war we created the imf to provide some basic rules for the monetary system, recognising that the system is interlinked and that problems in one country may also create problems in others. in the 1980s we agreed on the basle accord with joint supervisory rules for the internationallyactive banks. recognising now that supervisory convergence hinges on agreement on crisis management and resolution, i think that it is time to address this issue in a serious way. i see this as a necessary step for europe, given our single market. but in a broader context too, it will be a natural step towards strengthening the global financial system. thank you.