So to round off: Norway and Sweden have followed one another through the centuries, in war and peace, through crises and growth. And we can be thankful that we have succeeded in moving from poverty to wealth and becoming two of the world’s wealthiest nations. Often the central banks have been able to contribute to higher welfare, but sometimes monetary policy has unfortunately been destabilizing. Our joint history is continuing, we have common challenges to face going for-ward. Higher capital and labour mobility throughout the world opens new possibilities to raise welfare even further, but globalisation also require that we try to find common strategies across countries. We can also enjoy our similarities and continue teasing one another when we meet on the sports field. As Sweden now follows its team in Euro 2016, we can’t help but ask, oh where’s Norway? But on the other hand we can expect a lot of teasing from you in the next world cup ski event! BIS central bankers’ speeches  3
The Bretton Woods System became unsustainable as the US began to allow money supply to grow well beyond the gold reserves held by the US Government. When the System collapsed in 1972, the world’s monetary system was converted to a fiat money regime in which major international currencies freely floated against each other. The post-Bretton Woods era represented a new era in which governments would be given more or less a free hand to pursue their national interests and domestic policy agenda without the rigid constraints imposed by a Gold Exchange Standard. Unfortunately, the initial experience under the new regime was far from satisfactory. In my view, financial and macroeconomic stability cannot exist without an effective monetary anchor. For many centuries, the linkage to the precious metals had provided an external monetary anchor. Of course, the Gold Standard or Silver Standard had many shortcomings but it nevertheless provided an externally imposed discipline against monetary expansion. However, under the fiat money and floating rate regime, financial and macroeconomic stability can only be achieved if we have “3 Ds”! What does “3Ds” stand for? The first D stands for “Monetary Discipline”, the second “Fiscal Discipline” and the third “Market Discipline”. Conceptually, the removal of the external monetary anchor in the form of backing by precious metals must be replaced by these three types of discipline. If any of these three disciplines breaks down, then serious consequences or even a financial crisis may occur. Let me address these three disciplines in turn.