The main concern is the problems in the banking system, and the need for capital injections from the public sector has been highlighted. This type of support measure is complicated by the need to address the budget deficit. The outcome of the election in Greece and the uncertainty over whether a government can be formed, and if it would then be able to present the savings needed for the next payment of the support loan from the EU and the IMF, have also sent shockwaves through the financial markets. This means that the unease on the financial markets has increased once again. With regard to the statistics reflecting real economic developments in the euro area, the confidence indicator showed weaker confidence for the euro area as a whole. The purchasing managers’ index for Germany has also weakened, but at the same time other German statistics have been stronger than expected. This applies, for instance, to the IFO indicator, as well as to production in industry. It is natural for us to focus on the parts of the world that are facing major problems regarding growth. But it is also important to remember that the situation is not as gloomy in all of the euro area countries, as illustrated by Germany. It is also important to note that the US economy has continued to strengthen, albeit at a slow rate. The situation on the labour market is improving slowly but surely and this has contributed to increased confidence among US households.
However, the Treasury bills have to be exchanged every six months. Norges Bank has proposed that banks be supplied with government bonds at floating rates and a maturity equivalent to the duration of the swap agreement. This may simplify the arrangement. Norges Bank has also expanded its use of its ordinary instruments. We have supplied additional liquidity through our loan facilities and made arrrangements for banks to furnish a greater range of securities as collateral for the loans. We have also provided loans with longer-than-usual maturities. 89 banks signed up for a two-year fixed rate F-loan, and two days ago 100 banks signed up for a three-year floating rate F-loan. These F-loans are geared to small banks. As shown in the chart, more than half of the bids have been below NOK 100 million. Norges Bank has also supplied NOK through currency swaps and offered USD loans to Norwegian banks. In all, these measures have provided banks with good access to short and long-term funding. However, the interbank market is still not functioning satisfactorily. We have now moved into a phase where the main challenge may be banks’ financial strength. This is partly due to the downturn in the global and Norwegian economies, which over time will result in higher losses, but also because higher capital adequacy is now being required in the markets. The same view has been expressed by the Norwegian supervisory authority. We see that many banks abroad are raising new capital, with or without assistance from the authorities.