Norges Bank has therefore devoted considerable resources to developing a suite of models for analysing this interaction. Somewhat simplified, the interplay can be illustrated by developments during the previous banking crisis in the early 1990s in Norway. Households had accumulated excessive debt at that time. They had to tighten spending in order to reduce debt. They increased their financial saving markedly and reduced spending on consumption and housing investment correspondingly. This resulted in a sharp fall in earnings among companies that provided goods and services to households. Banks sustained substantial losses on their loans to these companies. Bankruptcies and lower activity resulted in lower household income and further spillovers to the economy. Such interaction effects are important in explaining that financial crises tend to follow in the wake of imbalances in the property market. It is difficult to determine with certainty when asset prices exceed levels that are not sustainable over time. Nevertheless, a long period of debt-financed increases in house prices seems to be a potent signal of a build-up of risk in the financial system, a signal that should be taken seriously. If we can restrain the build-up of such imbalances, we also reduce the risk of financial instability. The question can be raised as to whether the interest rate should be used to a further extent in preventing the build-up of systemic risk. Higher interest rates can curb the rise in both debt  BIS central bankers’ speeches  3  and house prices during an economic upturn.
Our current approach to ensure firms are able to continue to operate core functions in a major operational disruption involves ensuring that firms have primary and secondary sites at a safe distance from each other and the capacity to switch operations between the two without any extended interruption in activity. But with cyber such common systems environments between primary and secondary sites and mirroring of data between the two could, in the event of a successful attack, result in a complete loss of systems, disrupting a firm’s capacity to operate and leaving the timeframe and route to recovery uncertain. Unlike most other forms of operational disruption, we know too with cyber that this is not a game against nature. There are groups out there that are motivated to attack the sector. For most, the motivation is economic; that accounts for the rise in fraud. But there are actors out there, sometimes state-sponsored, who may be motivated to bring systems down and cause harm to the sector. Their capabilities vary, but it is in the nature of cyber that attack types are constantly evolving and readily scalable. And the threat is international. Attacks can originate anywhere around the globe. This all implies a different disposition for cyber defence. We should not expect to build an impermeable perimeter that, through technology design, will withstand attack. Rather we should expect the cyber threat to be ever-present, ever-evolving and networks to be penetrated. The capability to identify where this has occurred and to respond is key.