2001 = 100 150  Norges Bank Economic perspectives 15 february 2018  150  Five percent most productive firms Other firms  140  140  130  130  120  120  110  110  100  100  90 2001  2003  2005  2007  2009  2011  90 2013  1) Defined as firms in sectors 45 – 82 (excluding 64 – 68) in NACE Rev. 2. Source: OECD  In the past decade, the fallout from the financial crisis has probably had a dampening impact on productivity growth. Weak economic growth and heightened uncertainty have reduced businesses’ willingness to invest. In addition, banks in many countries held back on lending for a long period. This may have discouraged new entrants and slowed the replacement of outdated production equipment. The legacies of the financial crisis are now fading. Investment is picking up across countries. This could lift productivity ahead. But this will not materialise of its own accord. It is up to us to take advantage of the possibilities provided by technological innovation. Economic restructuring must continue. A flexible labour market, high education levels and a solid social safety net are preconditions for successful restructuring. In Norway, much of this is in place, but we too must be prepared to adapt to changing circumstances. In addition, nature has endowed us with advantages that it will be important to build on in the years to come.
This does not mean, however, that the situation will remain stable in the future. Were the general level of interest rates to rise, these funds could quickly flow elsewhere. Banks should therefore include these assumptions in their assessment and management of their interest rate risk. Furthermore, domestically focused banks should exercise greater caution in residential mortgage lending. When determining and applying their lending criteria with respect to loanto-value ratios, banks should bear in mind that the risks in the real estate market have increased. Moreover, when assessing the affordability for their borrowers, banks should be aware that mortgage rates can rise rapidly. The application of conservative lending criteria is important, on the one hand, as a precautionary measure for the banks themselves, in view of the prevailing risks in the market. On the other, a more prudent lending policy would help to counter a further build-up of imbalances. From a financial stability perspective, in the event of a further build-up of risks in the Swiss mortgage and real estate markets, it might prove necessary to take further regulatory measures. The SNB, for its part, will regularly assess whether an adjustment of the countercyclical capital buffer is necessary. BIS central bankers’ speeches  3