##u issue have brought the question of the krona ’ s equilibrium level to the fore. participation in the euro area means that at some stage the krona ’ s exchange rate with the euro will have to be locked. in the discussion that will then be held with colleagues in europe, the actual decision will be a matter for the government. the riksbank, however, is responsible for choosing the conversion rate we find reasonable on sweden ’ s behalf. meanwhile, we must bear in mind that we are dealing with negotiations between sweden and the other eu member states, so it may be inadvisable to get tied down in matters of detail at an early stage. the riksbank has made it clear on numerous occasions that it considers the krona to be undervalued. much of the debate on this issue has stemmed from an article on the krona ’ s equilibrium exchange rate that was published early in 1996 in our quarterly review. the article was intended to serve as a basis for public debate ; in our opinion it provided the best foundation that was then available for discussing the krona ’ s long - term value. the krona ’ s equilibrium value is naturally something that the riksbank considers continuously and the analysis is constantly being developed. accounts of various aspects of the exchange rate have been presented in the inflation report. the material that will be produced in the event of sweden deciding to participate in erm2 / emu will have to incorporate the additional information since 1996. it should also be noted that the levels and intervals that were presented in the article refer to the krona ’ s trade - weighted exchange rate and are therefore not directly applicable to the question of a reasonable central rate for the krona against the euro. furthermore, the euro is a new currency. arriving at just the right future exchange rate for the krona against the euro is therefore not exactly easy. although the financial markets are naturally eager to know, at this stage it is too early to allow the discussion of the krona ’ s path to focus on specific intervals or levels. but the course is clear — in the event of a euro peg, the rate for the krona will be stronger than the current level. current monetary policy in conclusion i should like to say something about the monetary policy situation in sweden. international economic prospects gradually deteriorated during 1998. knock - on effects from the crisis that originated in asia were included from an early stage in the riksbank ’ s spectrum of risks. early in

assets of over r500 billion. the registered banks in our country have an aggregate balance sheet of some r772 billion as at the end of august 2000 with capital and reserves of r71, 4 billion. the south african reserve bank is responsible for bank regulation and supervision which is based entirely on the recommendations of the basel committee. regulation and supervision concentrates on the management of risk exposures within each banking institution. exchange controls were relaxed by removing all restrictions on current account transactions, and on the inward and outward transfer of funds by non - residents, and then by gradually enabling residents to invest specific amounts of capital outside the country. as a step along the indicated path of systematically abolishing exchange controls, all such controls over non - residents were abolished in march 1995 when the dual exchange rate system was terminated. the result was that the financial rand disappeared and the proceeds of local sales of non - resident - owned south african assets were regarded as freely transferable from the republic and could also be freely used in the republic for any other purpose. in march 1997, the minister of finance also announced that individuals who are tax - payers in good standing would be allowed to invest a specified amount of their savings in any manner abroad and in fixed property in sadc countries. alternatively, they would be allowed to hold foreign currency deposits, up to a defined limit, with south african authorised foreign - exchange dealers or with foreign banks outside south africa. in february 1999 the minister also increased the amount that south african corporates investing abroad could remit from south africa from up to r30 million per new investment project in foreign countries and r50 million in sadc to r50 million and r250 million respectively. the large capital inflows over the past few years have enabled the reserve bank to increase the country ’ s official foreign reserves from the equivalent of 6½ weeks ’ worth of imports of goods and services at the end of 1994 to 14½ weeks ’ worth at the end of june 2000. the increase in the country ’ s official foreign reserves in recent years also made it possible to substantially relax exchange controls over the period. government took the lead in reintroducing south africa gradually to the global markets for public loan issues. a number of issues were made in the global and yankee us dollar markets, in sterling, deutsche mark and in the samurai yen market. south african private corporates were also encouraged to raise funds through equity and bond issues in international capital markets, and were allowed to use