The situation would be even more critical if the bank was at the same time a relatively small actor in its own country. In this type of situation the supervisory authority in the home country – which in this case is the one that decides – would probably consider that the need for supervision was not as great as the other countries might consider it to be. There is an evident risk of a conflict of interests between the countries. 2  BIS Review 38/2007  There are elements of similar problems in the Nordea case, too. However, here the problem is rather the opposite – namely that the bank group’s different companies (parent and subsidiaries) would be covered by supervision in several countries. The fact that each cross-border bank group has to obey and report to several supervisory authorities leads to additional costs and administrative duties for the bank. This is an obstacle to continued integration and to the competitiveness of the European bank market. Another problem is that there are no common arrangements for crisis management within the EU. Basically the only EC regulations defining how responsibility should be divided between the countries in the event of a cross-border crisis are regulations for compensating depositors in the case of bank failures. However, these regulations are not primarily intended to ensure efficient crisis management. They should rather be seen as protection for consumers.
The Government has also provided increased loans and guarantees to Norwegian export industries, and has raised lending limits for state banks. In addition, Folketrygdfondet (the Government Pension Fund – Norway) has been permitted to increase its purchases of bonds. 6  BIS Review 139/2009  The extraordinary monetary and liquidity measures implemented were tailored to a situation in which financial markets no longer functioned. In Norway, it has been appropriate to start winding down the unconventional measures earlier than in other countries: In recent months, Norges Bank has not supplied liquidity through the currency swap lines or liquidity in foreign currency. Loans in NOK at long maturities have not been provided since February. Surplus liquidity in the banking system was increased to more than NOK 100 billion, but is now close to a more normal level. This motivates banks to revert to money market funding. The swap arrangement involving covered bonds (OMF) in exchange for government securities has made an essential contribution to securing banks’ long-term funding. The first signs that the covered bond market was beginning to function appeared in spring. The minimum price in the swap arrangement has been raised by 0.9 percentage point, from NIBOR-0.2 percentage point to NIBOR+0.7 percentage point. Use of the arrangement is currently being phased out. Norges Bank eased its collateral requirements to enable banks to increase their borrowing in the central bank. This measure is now being reversed.