The IMF, the World Bank and the BIS are all involved in this work. Knowledge must be enhanced. The rule systems in many Third World countries must also incorporate bankruptcy legislation, arbitration procedures, and accountancy rules that are fair and transparent. Extensive and well-motivated work on reforms in also in progress in many industrialised countries. The tasks and methods of central banks and financial supervisors are being specified. Many private institutions are reviewing risk models and adapting them to the global reality. Conventional models must be augmented. Supervision also needs to be developed to cover new instruments and types of risk, risks that the Asian crisis has brought to the fore. The Basle Committee is now working to identify respects in which supervision may need to be extended, for instance to create standards for the bank’s transactions with highly leveraged institutions. The problems in LTCM clarified the central importance of this. At the global level, closer coordination of authorities’ work on supervision is being called for; today, such coordination is confined to sectors. A Financial Stability Forum has therefore been set up and consists, at least for the time being, of representatives of the finance ministries, central banks and supervisory authorities in the G-7 countries, together with IMF representatives. The Forum met for the first time some weeks ago. Discussions are also in progress in what is known as the Group of Thirty-Three, consisting of the participants in the G-10 and some twenty emerging market countries.
With the king’s signature on 14 June 1816, the foundations of the monetary system were laid. A new currency was issued – the speciedaler. And Norway’s first bank was founded and named, not surprisingly, Norges Bank. Branches were established in the largest towns, and the Bank’s first headquarters was located here in Trondheim, a twelve-day journey from the government in Christiania (now Oslo), and even farther from Stockholm 1. This provided a geographical distance from king and government, in addition to the more important formal distance. The people’s elected representatives at Eidsvoll had taken responsibility for the monetary system, as stated in Article 75 c of the Constitution: “It devolves upon the Storting […] to supervise the monetary affairs of the Realm”. The Storting, the Norwegian parliament, and not the king, would be Norges Bank’s employer. The king would no longer have the authority to print money at will. Although bitter memories of the decline of the monetary system during the Napoleonic Wars lay behind this decision, it was also inspired by the ideas of Enlightenment philosophers. Absolute monarchy under the Danish king was to be replaced by the sovereignty of the people and the separation of powers. Institutions with clearly distinguished roles would foster confidence and prevent the arbitrary use of power. To restore confidence in the monetary system, the promise of a stable monetary value had to be supported by concrete values. There could be no more empty promises.