Percent 6  6  5  5  4  4  3  3  2  2  1  1  0  0  2005  2010  2015  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  2020  1) Weighted average of money market interest rates for seven trading partners. Source: Refinitiv Datastream  A prevailing view over the past decades has been that fiscal policy should follow simple, robust rules and should to a limited extent be used actively to stabilise the economy. Globally, there are now signs that this view is changing. The pandemic may mark a turning point. In the period ahead, we are likely to see a more active fiscal policy among many of Norway’s trading partners. There are several reasons for this. For one thing, there is a recognition that the room for manoeuvre in monetary policy is limited. After the financial crisis, a number of central banks have assumed considerable responsibility for sustaining activity and smoothing economic fluctuations. At the beginning of last year, policy rates were therefore already at very low levels (Chart 7). At the same time, low policy rates reflect long-term trends, such as an ageing population, a high willingness to save, greater inequality and declining productivity growth. The result is that the level of what we refer to as the neutral interest rate is lower than before, even when economic conditions are in balance. The room for policy rate reductions in downturns is therefore smaller.
There will then be a maximum six-month period before the national currencies cease to be legal tender, at which point the transition to the euro will have been completed. Again, during this period in relation to the transition of retail transactions the guiding principle will be no compulsion and no prohibition, although collective efforts will no doubt be made by retailers and banks to shorten the period of dual denomination as far as they can. As far as the UK is concerned, the new Government -- while not definitively ruling it out -- has pointed to formidable difficulties in the way of participating in the euro from the beginning, and promised a referendum before the UK could join. A key consideration for us is likely to be whether -- on the basis of our assessment of the extent to which convergence has indeed been achieved -- the euro-area is a safe club to join in its early stages. If the Government were to decide not to join, at least at that point, it will be crucially important -- in our own national economic interest, and in order to avoid creating unnecessary problems for the euro-member countries -- that we continue to pursue, in parallel with those countries, the consensus policies of monetary and fiscal discipline. If EMU goes ahead, whether or not the UK is a part of it, it is clearly in our interest that it should succeed.