inclusive, even when the single market has been implemented. the actual introduction of euro banknotes and coins will not noticeably increase competitive pressure in sweden, as prices here will continue to be expressed in krona and prices in the euro countries will be expressed in euro. this will probably continue to give some scope in the future for specific pricing adapted to swedish conditions. i stated earlier that the role of the krona as unit of account and means of payment in sweden is unlikely to be affected by euro banknotes and coins becoming legal tender in the euro area as of 1 january 2002. the krona is also likely to continue to play an important role as store of value for swedes, as least uncertainty over real growth in net wealth, i. e. future real purchasing power, will be achieved if households save and borrow in assets and liabilities in their domestic currency, as long as price stability is maintained. hence, a large part of swedish households'assets and liabilities are held in krona today. those swedes who now choose to build up their future purchasing power by buying euro bonds are probably intending to pay for their future consumption in euro, either by moving to a euro country or because they assume sweden will adopt the single currency at some point in the future. this applies at any rate to interest - bearing assets, while for equities uncertainty over the future real value is only very slightly connected to the currency in which the share is issued. basically, the earnings are determined by where the company has its production and sales and by the competitive situation. it is the profits that increase equity and thus shareholders'net wealth and real purchasing power. the choice of basic currency is not self - evident for multinational companies with owners, production and sales spread throughout the world. essentially, it should be the shareholders'country of domicile that determines the currency. when this question was discussed prior to the introduction of the euro in 1999, the focus was on the size of the portfolio effects if several large multinational companies domiciled in sweden were to convert to regarding the euro or another currency as their domestic currency. the connection was then made to the possibility of denominating and accounting in a currency other than the krona. there were considerable difficulties in assessing the possible size in portfolio shifts, but the illustrative examples then produced showed large shifts in portfolios. it was also assumed that demand for the krona on the futures market would decline significantly, as companies would not try to counteract

reduced price differentials. firms will need to consider their price - setting strategies and costs in the production and distribution chain. at the same time, it is important to emphasise that the major step in the economic integration process was taken back on 1 january 1999, when eleven countries irrevocably fixed their exchange rates and the euro began to be their currency. despite the fact that anyone travelling between the euro countries and wishing to use banknotes and coins has had to exchange them, the national currencies have merely served as different expressions of the same thing, namely the euro, after 1 january 1999. since that date there have been major changes in the economies of the euro countries, not least in the foreign exchange markets and the markets for securities, which, among other things, i will discuss today. in the following i shall begin by discussing the development trends we have seen on the markets for securities over the past few years and then take up various impediments to continued integration in the securities field. after this i intend to speak about the significance of the single market and the single currency for sweden. capital adequacy rules steer the euro money market let us begin by examining the money market, where short - term securities are traded, normally loans to be repaid within a year. the interbank market for unsecured transactions became almost fully integrated right from the start of the monetary union in 1999. the joint monetary policy and harmonisation of market practices were the main reasons for this rapid process. however, the relatively immediate success of the joint reference interest rate eonia and the well - functioning settlement of cross - border payments via target also played a large role. since then we have seen a particularly strong increase in activity among various derivatives. according to ecb studies, this development is partly because the banks need to allocate less capital to meet the capital adequacy requirement for derivatives than for other money market instruments. both the repo market and the market for securities with a short duration, such as treasury bills and commercial papers, have developed relatively well, but there still remains a clear national segmentation. in the repo market this segmentation seems to primarily reflect difficulties in assessing the underlying securities, while integration on the market for short - term securities is mainly hampered by the lack of a harmonised trade environment and separate systems for settlement. the fact that the euro countries also have different tax systems is evidently another important barrier to continued market integration. evident success for euro