a more flexible key, presumably taking into account the geographic spread of the bank ’ s business. to achieve the latter, it would be necessary to find some commonly agreed criteria for assessing a bank ’ s systemic relevance to the financial system of a country. merely using market shares as a criterion will probably not be adequate as other aspects, such as the bank ’ s relevance to the payment system, clearing and settlement, involvement in inter - bank securities markets and so on would also be important in this respect. at the same time, in a constantly changing banking landscape, it would be difficult to find criteria that are so clear - cut that assessments will not be “ up for negotiation ” in a sharp crisis scenario. in order to avoid having crisis management being held up by conflicts of interests more than necessary, i am personally inclined to believe that a general key that is fixed once and for all is the preferred choice. possible ways forward the title of this speech is a question : “ are we ready to deal with a cross - border banking crisis in europe? ” regrettably, the answer is no! before we can say we are anywhere near “ ready ”, we must deal with some serious challenges. in particular, we need to solve the problem of how to organise supervision, crisis management and crisis resolution for cross - border banks. given the great complexity of the issue, achieving a practical solution will not be an easy task, and there is no altogether ideal solution. the amount of work that has already been set up for us on the european regulatory agenda is already quite staggering, which suggests that everything may not be achieved in the next few years. but we must not use this as an excuse for not starting to deal with these important issues. we can at least start the analytical process, take stock of the problems and examine the pros and cons of different solutions. the longer we wait to get this process started, the greater the risk that we ’ ll end up in a very serious mess. i, for one, certainly hope that we manage to have some solution in place before the next major financial disaster in europe occurs. i wouldn ’ t want to meet the eyes of the european citizens and tell them that we knew this could happen, but we were too busy to do anything about it. some different avenues have been outlined in the ongoing international discussion. so far, the focus for discussions in the eu has primarily been on crisis prevention in the form of regulatory reform and different organisational structures of supervision

the idea was to keep demand up until international economic activity showed an upturn. another example is the beginning of the 1980s, when activity in the economy once more came out of synch. sweden came out of the decline faster than other european countries by means of two aggressive devaluations, but the cost was that inflation became stuck at a high level. the general council also expressed scepticism, in its comments on the commission's report, of the statement that it would be possible to pursue an individual economic policy in the case of remaining outside emu. with hindsight, one can perhaps conclude that this scepticism was a little exaggerated in that the steering interest rate has been both higher and lower than in the euro area in recent years and the krona has fluctuated substantially. given that a country has systems for both fiscal policy and monetary policy that inspire confidence, there appears to be somewhat better scope for action within the framework of an economic policy aiming at macroeconomic stability than was earlier assumed. sweden and the emu, sou 1996 : 158. the general council of the riksbank's comments 1997 - 02 - 06 with regard to the labour market, it should be clear that the functioning of the labour market and the high level of unemployment no longer comprise as strong a restriction as they did in the mid - 1990s. unemployment in sweden has fallen. several factors have played a role in the decline. one of these is probably the fact that the wage formation system has been changed in a way that contributes to better concordance between productivity and wage growth. nevertheless, there are clear signs that the labour market still comprises a problem area. a clear majority of the eu member states has now joined the monetary union, which was not evident when the calmfors commission made its assessment. the political cost of remaining outside of emu has thus become greater, and public opinion has become more positive towards membership. i personally think that there are also new arguments that should be considered with regard to the costs of remaining outside the union. for instance, the economists andrew rose and torsten persson have made in - depth analyses of the effects on trade of a monetary union. there could be reason to believe that the positive effects are slightly greater than was assumed in connection with the calmfors commission's report. a single currency in the euro zone would remove the foreign exchange risk in around half of sweden's foreign trade, while the other half would in this case continue