He emphasised that Norges Bank had to be independent and free of pressure from the political authorities and civil servants He stated at the time: 12 “As I have said before, I believe that the Bank can be managed just as well from Trondheim as from Kristiania, and I believe, better, because in the capital city it will be subject to pressure that it is impossible to know how long the board will be able to resist, since there are those in Kristiania, and perhaps also in the government, that may seek to change the Bank’s objectives. Norges Bank should be maintained as an independent institution under the control of the Storting.”  10  See Kydland and Prescott (1977). 11  See Figueiredo (2007). 12  See Borlaug (1999), pp 34-35. 6  BIS Review 111/2008  Geographical distance to markets and government has no significance today, but it may well be said that Bomhoff expressed thoughts that were articulated in more modern terms by Kydland and Prescott 70-80 years later. History has also taught us that fiscal policy has considerable bearing on the role monetary policy can play. If the government's debt is too high, the political authorities have an incentive to increase inflation in order to reduce the real value of the debt. It is then difficult to anchor inflation expectations. No monetary policy can secure the nominal anchor if government spending spins out of control. Monetary policy and fiscal policy must therefore have a common platform.
Nevertheless, the gradual decline in its share of global foreign exchange reserves, which began in the mid-2010s, has gained momentum since 2020, and we are witnessing a renewal of the debate on the dollar's continued role as the anchor of the IMS. Let's not be naive: geopolitical forces are powerfully at work, all the more so since Russia’s invasion of Ukraine in early 2022. China, the world's secondlargest economy, has been expressing its wish to internationalise the renminbi for several years now; this has already materialised in its trade i and could accelerate over the next few years. In particular, the climate transition will lead us to reduce our consumption of fossil fuels and considerably increase our consumption of resources for generating cleaner energy. As a result, we are likely to witness a profound reconfiguration of international trade and financial balances and, potentially, of the balance of power between currencies. China, for example, has positioned itself at key points in supply chains, and has a very dominant, even hegemonic, share of certain finished products. ii The use of the Chinese currency is on the rise: in 2022, 7% of transactions on foreign exchange markets had a renminbi leg, iii a figure twice as high as in 2019, thanks in particular to the offshore centres created since 2010. China also plays a major role as a bilateral creditor - with outstanding loans estimated at more than USD 350 billion, iv i.e.