dependence of the various markets has increased. this means that crises can more quickly and more forcefully hit an increasing number of economies at the same time. the important thing now is to find the right tools for managing these new risks ; to find instruments for a better - balanced development. we need a better insight into the build - up of global risks. this requires increased cooperation between public authorities around the world. it requires greater harmonisation of regulations and supervision. it requires a better readiness to manage cross - border crises. and to find the means to counteract the build - up of large imbalances we must begin to think along new lines. at present the functioning of the financial system is being maintained with the aid of the measures implemented by public authorities. one sign that the crisis is no longer as acute is that the ted spreads have fallen in sweden, as well as the united states and the euro area. these spreads are now back to around the same levels that prevailed immediately prior to the worsening of the crisis in autumn 2008. but the financial markets are still functioning much less efficiently than normal. it is also still difficult for companies to finance themselves in the capital market. the major question now is how we can restore confidence in the financial markets so that they can manage on their own. this is a task that authorities around the world have been struggling with for some time now. in my opinion, we need a purge of the international banking system. the problems that are weighing down the banks ’ balance sheets must be brought to light. it is only when we see the depth of the losses that confidence can be restored. the great complexity in the current financial system means that this is a much more difficult process than in the swedish bank crisis of the 1990s. it is difficult to say how long it will take before the programmes currently being implemented in europe and other parts of the world have the intended effect. meanwhile, the riksbank is prepared to do whatever it takes to maintain the functioning of the swedish financial system. thank you!

this from happening. it is probable that it would require fairly substantial interest rate increases, something that may not be received sympathetically when the reasons for the increases are not crystal clear. but more moderate interest rate increases could, of course, contribute somewhat. if nothing else, it would provide a signal from the central bank that it envisages certain development problems. i also believe that risk scenarios with a longer forecast horizon may be an option for clarifying what the risks may be in the longer term. it is conceivable that the price of housing or some other asset may be driven by factors that are difficult to explain or which may be assumed to give rise to inefficient risk allocation and large fluctuations in economic activity and inflation. this would then be taken into consideration in our monetary policy thinking in some way. 2 nevertheless, it is probably the case that the greatest contribution to a more effective strategy is to ensure that appropriate regulations and supervision procedures are in place. new financial supervision arrangements as i mentioned earlier, one of the problems was that financial supervision did not give sufficient consideration to factors in the macro economy and to systemic risk. at the swedish level, an important step in this is of course to ensure that the coordination between the riksbank and finansinspektionen functions as efficiently as possible. it is also necessary to have coordination at the international level. in november 2008, the european commission appointed frenchman jacques de larosiere to lead a task force to draw up proposals for reforming the regulatory regime within the eu. the proposals were presented on 25 february this year. 3 they include establishing a special body, the european systemic risk council, with responsibility for overall financial supervision ( macro - prudential supervision ) in the eu. the idea is that the twenty - seven central banks in the eu would be members of the council and that the council would receive resources from the ecb. its tasks would include pooling and analysing information, for instance on macro economic conditions, which may be significant to the stability of the financial system. part of the problem is that financial supervision has had an excessively national focus. the de larosiere group therefore proposes enhanced coordination of the national supervisory authorities. there is already cooperation on financial supervision within the eu. this takes place for instance in the form of special committees for the supervision of banks, securities and insurance. now it is proposed that these supervisory committees should be given the status of public authorities. this would make it clearer