as being significantly less direct than those arising via import prices, which i discussed earlier. changes in the real exchange rate may entail adjustments to the economy that monetary policy may need to consider. for example, during a real appreciation of the krona, exporting and import - competing firms may have to review their costs so as to restore competitiveness. among other strategies, the firms can achieve this by implementing operational changes to increase productivity. 10 such adjustments can contribute towards lower inflationary pressures, as increased productivity lowers unit costs. another possibility for some firms is to move operations overseas. for major firms with broad international operations, it may be relatively easy, in some cases, to reorganise operations so that costs arise in another currency than swedish kronor. however, for smaller firms with all of their production in sweden, relocating operations overseas is generally associated with high costs. monetary policy decision - making in consideration of the exchange rate i would now like to say a few words about how everything i have said so far about the exchange rate affects my view of monetary policy analyses and decisions. as its influence on the economy is subject to a time - lag, monetary policy has to be conducted in a forward - looking manner. consequently, forecasts play a decisive role in analyses and decision - making. at the same time, the exchange rate, like other prices set on financial markets, is very difficult to forecast. 11 nevertheless, due to its significance for the development of small, open economies such as sweden ’ s, it is important to form an understanding of exchange rate developments. the riksbank tries to analyse and forecast the development of the trade - weighted exchange rate, which is to say the value of the swedish krona against a basket of the currencies of sweden ’ s most important trading partners. due to the volatile nature of the exchange rate, no attempts are made to capture short - term variations in it. instead, the focus lies on the more long - term trend. the starting point for this a statistical model in which the real exchange rate is related to relative gdp, the terms of trade and net foreign assets. 12 however, the final forecast for the exchange rate considers the fact that the exchange rate both influences and is influenced by a multitude of other variables, including the interest rate differential in relation to other countries. 13 see, for example, ekholm et al. ( 2008 ). pressure on firms to improve productivity can be seen as a positive aspect of a

concentrated ownership? i have an open mind on this issue, too. both alternatives have their advantages and disadvantages. a broad ownership may better protect the interests of the minority shareholders, but if financial problems occur the majority owners have stronger incentives to provide capital injections. the governance of a bank is sometimes promoted by having strong owners, but there are also examples of strong owners misusing the bank for their personal purposes. all in all, you should be open to different forms of ownership but monitor them closely. should you allow different forms of banks, such as commercial banks, savings banks, credit unions, development banks and micro - finance institutions? in my view : yes, of course. competition is best served by having a range of bank ownership structures such as shareholding, mutual ownership, nonprofit organisations, etcetera. but having said this i want to warn against certain practices i have experienced in some countries which i would call “ compartmentalization ”. this happens when the legislation prescribes unnecessary and ineffective borderlines between the allowed activities of defined banking categories. usually, the intention is to ensure limited competition and high profits for the various categories. such restrictions are in effect a subsidy to the banks and they are harmful to the consumers and to the overall economy. the rule - of - thumb should be that any bank should be allowed to conduct any of the generally regulated bank activities if it can prove that it possesses adequate competencies, systems and resources. should there be one set of prudential rules for all institutions conducting bank - like activities or should you differentiate? could there be “ light - touch supervision ” for small and non - complex institutions for instance in micro - finance or local credit unions or exchange houses? there is no obvious answer to these issues. on the one hand you want to create a fair level - playing field for all bank activities which call for equal treatment. but on the other hand there is no necessity to burden small institutions with the elaborate regulations intended for large and complex banks. as i noted before, there must be a reasonable relation between the amount of regulation and its cost to the institutions. consequently, i would accept the case for lighter supervision of small and non - complex institutions, but there must always be adequate supervision to ensure discipline also for those. even when a small institution fails it causes disruptions and a loss of confidence in banks in general. we have recently had bad experiences in sweden, so if you intend to introduce risk - based supervision i advise you to do