Under the French presidency, the G20 has been at least as active as the Fund. Of particular relevance is the steady implementation of the Mutual Assessment Process, a new instrument for multilateral cooperation and oversight aimed at promoting economic adjustments worldwide. We will have the privilege of hearing from Minister Lagarde about this important endeavour later during lunch. In today’s conference, we would like to advance from diagnosis to treatment. Last year, the main focus was on the sources of instability and the inadequate asymmetric adjustment mechanisms of the current system. This year, the aim is to progress towards a common  BIS central bankers’ speeches  1  understanding of the role of the Fund and to discuss concrete reform proposals. In doing this, it is important that we stay focused and realistic. The two main tasks of the IMF are crisis prevention and crisis resolution. The main Fund policies for achieving these tasks are surveillance and financial support. Before leaving the floor to our panellists, allow me to reflect very briefly on these two topics. The IMF is mandated to oversee the international monetary system and monitor the economic and financial policies of its member countries. In this way, it helps to ensure the effective operation of the international monetary system, thereby promoting and sustaining sound economic growth. In recent years, much has been done to make surveillance more focused and effective. Attempts to better integrate financial sector issues and spillover effects are all steps in the right direction.
Withdrawals from the fund at 4 per cent can therefore finance 15 per cent of public spending in 10 years’ time. This can continue on a permanent basis without reducing the capital in the fund. The fund will therefore lead to smaller cuts in government welfare spending than would have been the case without the fund as the costs related to the ageing of the population have an impact on government budgets. The actual building up of the fund may span a short generation. A fund with investment abroad enables Norway to separate the revenues generated by oil and gas production from petroleum revenue spending. An alternative could have been to regulate the production rate, keeping our wealth under the sea bed for a longer period, as was attempted in the 1970s when the production ceiling was set at 90 million standard cubic metres per year. Oil companies currently produce 240 million standard cubic metres per year. The fund acts as a buffer between widely fluctuating oil revenues and domestic expenditure. The annual spending decision can be made independently of the size of the revenues. Thus, the fluctuations in government oil revenues do not have an automatic impact on the Norwegian economy. The fund also has a stabilising effect on the krone exchange rate as capital outflows increase when Norway’s petroleum revenues rise. As a savings plan, the fund enables petroleum revenues to be used by not only the current generation but also future generations. The fiscal rule ensures that this is the case.