See  BIS Review 108/2009  decentralised and specialised. The focus was on customer needs supported by some of the first-ever market research on their tastes. In the end, it was Sloan and General Motors whose strategy was emulated around the world. In meeting the future needs of the real economy, perhaps there is a case for more “Sloans” and fewer “Fords” in banking. Perhaps there is a case for a strategic focus on the “local” as much as the “global”, for more micro-finance and less macro-finance. Perhaps it is time for relationship-banking to make a comeback. •  Strategy – diversity versus diversification  Customers require a basket of banking services. The provision of some of these services is important for the wider economy; they are a quasi-public good. For example, the provision of monetary services – basic banking – has a strong public good element. That is why depositor protection, in the form of deposit insurance, is stipulated by the state in many countries. Lending to households and companies can also be thought to contain a public good element. Other functions performed by banks may provide more limited social benefits, though their private benefit may be significant – for example, proprietary trading in complex instruments. If scale economies in banking are weak, banking services could probably be equally well provided by either a financial supermarket or a set of specialist banks. These different structures might not, however, be equivalent from a risk perspective.
Mr Gjedrem focuses on the issue of financial stability: experiences and challenges  Speech given by Mr Svein Gjedrem, Governor of the Central Bank of Norway, at the annual meeting of the Norwegian Savings Banks Association, held in Sandefjord on 21 October 1999. (Shortened version) 1. Introduction  Every day around NOK150–200 billion change hands through the banks’ accounts in Norges Bank. In the course of a week, payments corresponding to our gross national product for an entire year have passed through Norges Bank’s settlement system. These payments involve all types of transaction, from a 10 kroner ice cream purchase to securities transactions where a single transaction may involve billions of kroner. The banks play a pivotal role in the payment system. Deposits are now the predominant means of payment. Payment settlement is the banks’ most important function besides channelling funds from savers to borrowers. In other countries, securities markets are of growing importance. They are taking over an increasing share of banks’ credit intermediation. This may also occur in Norway. Securities are also increasingly serving as collateral in payment settlement. These three elements - payment and settlement systems, banks and other financial institutions, and securities markets - make up the financial system. Every day we experience how dependent a developed economy is on the smooth functioning of this system, i.e. on financial stability. The volume of foreign payments is substantial and on the rise. Banks and securities markets are becoming ever more closely integrated.