Page 9/9  Protectionism complicates monetary policy  Thomas J. Jordan Chairman of the Governing Board Swiss National Bank Volkswirtschaftliche Gesellschaft des Kantons Bern Berne, 31 October 2018  Chart 1  2  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 2  3  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 3  4  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 4  5  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 5  Greater uncertainty / appreciation of the CHF  6  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank  Chart 6  7  31.10.2018  Volkswirtschaftliche Gesellschaft des Kantons Bern | Thomas J. Jordan | © Swiss National Bank
The krone exchange rate is the price of our currency measured in a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. Capital flows freely and flows can change rapidly. This can spill over to exchange rates and interest rates as well as output and employment. There is a cost involved for businesses in hedging against fluctuations in the krone. A krone that is stable - but too strong - also entails social costs in the form of low activity. Likewise, a krone that is stable - but too weak - is a source of high inflation. Norway is running a current account surplus as a result of sizeable oil and gas exports. Owing to high oil prices, the current account surplus is rising this year. An increase in the current account surplus will normally result in higher net demand for the domestic currency. In Norway, however, the additional foreign exchange revenues that accrue to the Norwegian state as a result of high oil prices will be invested in foreign securities through the Government Petroleum Fund. As a result, they will not have a direct impact on the balance in the Norwegian foreign exchange market. Oil companies hold a large share of their financial capital in foreign currency, and higher revenues in these companies therefore results in an increase in capital outflows.