Thus, even with a return in equity and fixed income markets of minus 19 percent measured in NOK, the capital in the GPFG only fell by approximately NOK 5 billion in 2002.4 In 2008, the sum of the negative return, the change in the krone exchange rate and transfers of petroleum revenues was positive, and the value of the GPFG therefore increased between 2007 and 2008. The next time equity prices fall, the figures will be different. As the government’s oil and gas revenues decline and the size of the GPFG increases, the cushioning impact of petroleum revenues on any falls in the fund’s value will gradually decrease, making the fund’s value even more dependent on the return. In years of negative equity market returns, large absolute falls in the GPFG’s value must be expected. A second lesson is that stock market crashes do not necessarily reverse quickly. The examples I have referred to, the financial crisis in the US, the dotcom crash, and Japan in the 1990s, show that the crises we have observed in the past can vary in depth and duration. The path of the recovery since the dotcom crash has been somewhat U-shaped. Although the fall in market values was not as steep as in 2008, the recovery was slower. Developments in Japan have been more L-shaped: the fall was rapid and the recovery has been slow. Developments since the financial crisis have been V-shaped: a steep fall and a rapid recovery. All these crisis scenarios could occur again.
The independent Banque de France has over the last six years shown great determination in helping to ensure that the euro inherited as much confidence as possible at its birth. This legacy of confidence is in good hands. Fiscal policy In the field of European fiscal policy, the Monetary Policy Council draws attention to the following three points. –  First, it remains essential that the mutual surveillance by euro area governments of national fiscal policies, within the framework of strict compliance with the Stability and Growth Pact, function smoothly. The European Union does not have a significant federal budget for economic policy— the European budget only represents 1.27% of Union GDP. Therefore, all the national budgets of the Member States combined function as the Union’ s budget. The preservation of confidence in the euro, and consequently the prosperity, growth and creation of jobs in the euro area, will depend on the quality of fiscal surveillance throughout the area. –  Second, by adopting the Stability and Growth Pact each individual European country, and not just the European Union, set itself the medium-term objective of achieving public finances “close to balance or in surplus”. The Monetary Policy Council emphasizes this point, which is essential for the stability of the single currency and is necessary to favour growth, job creation and the fight against unemployment. One of the difficulties encountered by Europe, as by France, is that public opinion is not yet entirely convinced.