The time may have come to evaluate the utility of the central credit registers that have long existed in some continental European and Asian countries. None of that, however, can alter banks’ core comparative advantage as monetary institutions: the provision of liquidity through overdrafts, lines of credit and other working capital facilities. That role might be aided by a revival of a market in trade credit.15 Banks will always be levered because their core monetary service revolves around transaction-account deposits, which are debt liabilities. And, on the other side of the balance sheet, they will always have somewhat risky asset portfolios because being a monetary institution makes them an efficient supplier of short-term finance to households, firms and the rest of the financial system. But they can do all that only if they are healthy and prosperous: only sound banks can make a credible promise to repay or lend money on demand. The fragility in banks’ balance sheets is why they are regulated. Today, I have sketched the outline of a Capital Accord for the future. An Accord that would go beyond reducing the probability of failure, by also addressing the need to cope with distressed banks, ensuring that resolution can be orderly. Taking the tax-deductibility of debt interest as a given, the banking authorities can make it beneficial to society as a whole, not just to private interests, by requiring that a minimum level of term bond finance be part of the capital structure.
The floating krone exchange rate has been able to act as a shock absorber for downturns in the Norwegian economy. In periods where oil prices have fallen and the economy has moved into recession, the krone exchange rate has depreciated and contributed to strengthening competitiveness and preventing inflation from moving too low. Nevertheless, interest rate setting is not decoupled from interest rate developments in other countries. A rise in foreign interest rates normally pulls in the direction of a weaker krone. A weaker krone pushes up prices for imported goods. When inflation is already high, as now, this increases the risk of inflation becoming entrenched, which we must take into consideration when setting the policy rate. If the FX market loses confidence in our commitment to tighten monetary policy when inflation rises, the krone may depreciate further. Confidence in the inflation target is a precondition for monetary policy's ability to dampen fluctuations in the economy and to support high employment. 3/5  BIS - Central bankers' speeches  In the long term, there is no conflict between the objective of price stability and high and stable employment. Ensuring that inflation remains low and stable is the most important contribution monetary policy can make to promoting high employment over time. We cannot keep employment permanently above potential by keeping the policy rate low. The level of employment over time is determined by structural conditions such as labour force composition, the tax and social welfare system and wage formation.