Chart: Mainland GDP  1/4  BIS central bankers' speeches  In Norway, growth in the mainland economy picked up through 2017 and the economic outlook improved. Low interest rates, improved competitiveness and an expansionary fiscal stance contributed to the upturn, while oil investment declined at a slower pace after falling sharply for several years. Although the activity level in the Norwegian economy was still somewhat below a normal level, the economy was emerging from the downturn that followed in the wake of the fall in oil prices in 2014. Employment was rising and unemployment was falling. The improvement in the labour market was reflected in a moderate increase in wage growth, which in the preceding years had been restrained by the decline in oil prices, lower capacity utilisation and lower underlying productivity growth. Chart: Consumer prices The depreciation of the krone following the sharp fall in oil prices in 2014 and 2015 gradually fed through to prices and resulted in higher inflation. As this effect faded and the krone appreciated, inflation fell back. Both low imported inflation and weak cost growth in the Norwegian economy contributed to low inflation in 2017. Underlying inflation remains below target, but prospects for higher levels of activity and slightly higher wage growth indicate that inflation will rise in the period ahead. Chart: Debt ratio and interest burden Elevated house price inflation and high debt growth have increased household sector vulnerabilities. After rising faster than household income for several years, house prices began to fall in April 2017.
A key area for cooperation that is being advanced relates to the provision of a robust liquidity management infrastructure for Islamic finance. This is an important imperative to ensure the resilience and stability of the Islamic financial system, as well as to reduce the cost of intermediation. A significant regulatory challenge remains in terms of having efficient crossborder liquidity risk management in the Islamic financial system, due to the lack of short-term Shariah compliant instruments in international currencies. A chapter in the book describes the regulatory response to the issue of liquidity risk facing Islamic financial institutions, including the important role of the International Islamic Liquidity Management Corporation (IILM) in facilitating cross-border liquidity management. BIS central bankers’ speeches  1  With these changes set to re-define the financial landscape going forward with far reaching implications, the publication of this book is both timely and relevant. Six years from its first edition in 2007 which made an important contribution to the literature on the regulation of Islamic finance, this second edition captures the diverse range of current information and updates arising from the regulatory issues in a post-crisis global economy. Reviews on the various characteristics of risks faced by Islamic financial institutions will improve the understanding and examination of the implications of current and new reform initiatives for the regulation and supervision of Islamic finance.