managing financial crises and alternative courses of action proliferate. politicians, whether or not they have the authority over the decision to intervene, want to satisfy themselves that intervention is justified and what is proposed is the right way forward. often the process of arriving at a consensus takes time and meanwhile the problem worsens and the effectiveness of the actions to be taken is eroded. i believe therefore that those responsible for the maintenance of monetary and financial stability should have the necessary emergency powers to do what is required independently and promptly. there is of course the need for transparency and accountability when exercising these powers to ensure appropriate checks and balances. at a time when many jurisdictions and international forums are reviewing the financial regulatory structure, the ability or inability of the financial authorities to take unusual action, independently and promptly, to protect the public interest should be addressed. my fourth and last issue is an involvement. this concerns the extent to which the authorities should be involved in the development of the financial infrastructure. i am sure you are aware of the huge amount of public money spent in all jurisdictions in the development of the physical infrastructure, building highways, bridges and airports to take people and goods from one place to another safely and efficiently, thus facilitating the conduct of economic activities for the benefit of all. authorities, however, seem to devote only disproportionately small amounts of resources to the development of the financial infrastructure to move money and financial instruments from one entity to another safely and efficiently for the purpose of enhancing financial efficiency that promotes economic prosperity. to some extent, the development of the financial infrastructure can be left to the market, with swift being a sterling example of private sector initiative in this area. but many of the important elements of the financial infrastructure are public goods, the provision of which, in a form that serves the public interest best, may not be financially viable for the private sector. furthermore, the conflict i mentioned earlier often comes in, affecting the willingness or the enthusiasm of the financial intermediaries to develop and use a financial infrastructure that promotes financial efficiency. i believe this is one of the main reasons why x in t + x in the settlement of some financial transitions is still a number other than zero, or why t + x is still not replaced by rtgs dvp even though the technology to do so has been available for some time. very simply therefore there is a case for the authorities to get involved, as a developer or a service provider, when a private sector solution that is in the public interest

speedier reduction of government debt, which is currently high. this will create greater freedom of action for future economic policy, which is particularly important in that sweden ’ s public finances are no doubt still relatively sensitive to the cyclical economic situation. but the future has further challenges in store for fiscal policy. an ageing population implies new and growing requirements, for example. another matter that may alter the conditions for fiscal policy is the increased mobility of tax bases, which in some respects may make it difficult to maintain present levels of taxation. better wage settlements but what about the next round? - 3as things now stand, fiscal policy will continue to provide good room to manoeuvre in monetary policy in the coming years. so what about the contributions from the labour market and wage formation? of the aggregate value - added in the swedish economy, wages make up almost 70 per cent. wage trends are therefore crucial for the path of inflation. for many years, the wage rise in sweden has been above the rate in most other countries in europe. but as we all know, instead of this giving swedish employees a better real wage, the outcome has been the reverse. in the 1990s the rate of wage increases in sweden has been curbed but the negotiated increases in the 1995 round were above the european average. as i mentioned earlier, economic policy in sweden has been focused on low inflation since 1991. a consistent implementation of this policy, with an inflation target, clarifies the rules of the game for wage formation. high wage increases are liable to boost inflation, which necessitates higher interest rates. the inflationary consequences of the wage increases can be modified if productivity growth is good, as has been the case in recent years. but at least a part of this productivity growth is achieved at the expense of jobs ; this is one aspect of the process whereby higher labour costs generate stronger rationalisation and maybe also an increased capital input. in this way, too, and not just because the higher interest rates directly affect demand and employment, a rapid wage rise is liable to endanger jobs. against this background, the outcome of the latest wage negotiations is better than in earlier years. agreements for the next three years have been concluded at levels around 3 per cent a year. it has been said that this takes wage drift into account but that is probably not entirely the case. instead one should no doubt count on wage drift averaging around 1 per cent. the average annual wage outcome in the period 1998 – 2000 would