It is thus not enough for the legal structure to be in place; there must also be a practical solution that quite simply does not provide any incentives to “push one’s way to the front of the queue”. I welcome these efforts to strengthen the frameworks and look forward to seeing the results. But I believe that one should have realistic expectations of the possibility to write down claims in a shaky market situation. The experiences from the Swedish banking crisis and also the Northern Rock case show us that in such situations it may be necessary to have an extensive guarantee of the banks’ obligations to stop a bank run or secure continued access to the international capital markets. …and a simpler way which has proven its worth in real crisis situations I would therefore recommend also introducing regulations that give the government the right to take over the ownership of a bank in a certain situation. If this is done in the right way, it will not only deal with the requirement that the shareholders should be held responsible, it will also minimise the risk that the government will need to bear costs that the creditors should bear. For this to work, the government should have the right to take over the shares before the capital is completely wiped out. There are at least two reasons for this. First, there is a risk that the owners will “gamble for resurrection” when the capital is low.
One hard-won lesson was particularly important: the central bank must keep the crown and government at arm’s length and must not extend credit to government. Control of the printing press would promote economic stability and prevent unrestrained money printing to finance spending by the crown. Two hundred years later, safeguarding the value of money remains monetary policy’s main task. Responsibility for monetary policy rests with Norges Bank, but today policy is geared towards maintaining stable inflation rather than a stable currency backed by a precious metal. The Bank’s role has also changed in other areas. From being the country’s only bank, Norges Bank took on the role of the bankers’ bank, with the new responsibilities that entailed. The central bank also has a responsibility to promote robust financial markets. The core of Norway’s payment system is housed in this building. Two hundred years as a central bank in a small open economy The Norwegian economy has changed over the past 200 years. In the early 1800s, eight in ten Norwegians worked in agriculture, forestry and fisheries compared with one in forty today. But some important features have not changed. Norway is a small open economy and developments abroad have an impact at home. Our foreign trade is largely based on natural resources. In the early 1800s, fish, timber and shipping were the mainstays of our economy. In recent times, oil and gas sales have accounted for a large share of Norway’s export revenues.