easy as such a conversion would mean that we intervened in the foreign exchange market. in addition, when and if the government decides that the krona should be part of a fixed exchange rate regime, we would be forced to intervene again to build up the foreign exchange reserve. we would then sell kronor to buy currencies, which would mean that we acted in a way that weakened the krona prior to transition to a fixed exchange rate regime. this is not the way to proceed. of course currency risk is a problem, but this applies mainly in the short term. we shall of course do what we can to limit this risk, but it should be remembered that our currency holding is long term and in this perspective currency exposure is probably a minor problem. as monetary policy in the countries whose currencies are included in the reserve is similar to that in sweden, it is in principle only real economic differences that lead to any trend changes in exchange rates. if the economies of these countries develop similarly, it is thus reasonable to assume that short - term fluctuations will offset one another over a longer period of time 9. the diagram below shows that empiric evidence supports this reasoning ( see figure 3 ). at the same time, there is a clear advantage to keeping these assets in other currencies than the krona. namely that they provide us with an opportunity to manage our assets actively in an entirely different way than would be possible if they were invested in kronor. this is because changes in the holdings could be perceived as monetary policy signals and because the size of our holding would mean that changes could upset the markets. credit risk one purpose of the method we use to determine the currency allocation is to limit the need for very liquid assets, for earnings reasons. it is not possible to exclude these assets entirely. this is because we need very liquid assets in the important intervention currencies if we are to be able to intervene. a fairly large part of our assets must therefore consist of us and european government bonds. as i mentioned earlier, our need of this type of asset is limited under the current exchange rate regime. this gives us scope to invest some of our assets in securities with credit risks 10, which provide higher interest. assuming that the assets ’ yield does not covary perfectly, this can raise the risk - adjusted earnings 11. however, the riksbank ’ s possibilities to make use of this are limited, as we currently invest solely in fixed - income securities.

" and taking into account the views of market participants that actually trade. furthermore, it is considered necessary to continuously deepen our understanding of market structures such as in terms of systems and regulations, in addition to investors'characteristics and their trading styles, and sharpen our awareness of issues on their potential effects. such collection of information and analyses on market developments are referred to as " market intelligence. " in this process, exchanging opinions with a diverse range of financial market participants is indispensable. it is certainly possible to enhance our understanding of the essence of financial markets by obtaining the views of as many market participants as possible. as a part of those efforts, the bank's staff are in contact with a broad range of market participants on various levels, and conduct surveys targeting participants in the money markets and bond markets. concluding remarks as i have explained, for central banks, financial markets are not only a place to conduct market operations in implementing monetary policy, but also a place to obtain valuable information. in addition, central banks have a significant interest in the sound functioning of the markets, as a condition for the effects of their monetary policies to spread smoothly. in this context, as the bank has significantly benefited from developments in theory on financial markets, it has made its own efforts in theoretical research, utilizing findings obtained through practices including the conduct of monetary policy, daily market operations, and analyses. from this unique position, the bank will continue playing a role of serving as a bridge between theory and practice. today's meeting is a great opportunity for discussions among numerous experts from academia and practitioners from financial markets. i would like to close by expressing my sincere hope that this meeting will generate fruitful discussions, and that further progress in research on financial markets will foster a better understanding of the markets and greatly contribute to the development of the economic society. thank you for your attention.