5 The Bank’s tasks were to issue Norwegian notes and coin with a stable value measured in silver, perform banking services for the government, provide loans and take deposits. Equity capital was procured by introducing a silver tax. The silver standard was replaced by the gold standard in 1874, and the following year saw Norway’s entry into the Scandinavian Currency Union. The Norwegian krone became the new currency unit. Norges Bank as the bankers’ bank Norges Bank became a more modern institution with the Act of 1892. 6 It became a bank for the banks that had emerged and a common national discount rate was introduced. The note issuing rules were also changed to enable Norges Bank to meet bank demand for liquidity more easily. It was legally established that Norges Bank would be the government’s treasurer. The Bank remained legally independent of the government authorities in its use of instruments: the Act of 1892 reconfirmed that Norges Bank could not be given instructions by the government or the Storting and Bank decisions could not be reversed by other authorities. The contemporary ideal was an independent central bank. 7 At the same time, a permanent chair and deputy chair were assigned to Norges Bank’s board, both appointed by the government. The other board members were appointed by the Storting, as were the members of the Supervisory Council who were responsible for supervising the Bank.
Other elements were:   Fiscal policy oriented towards full employment    Credit regulation within limits specified in a separate credit budget    Channelling of loans through state banks    Regulation of capital movements    Low nominal interest rates stipulated by the government authorities    A fixed, though adjustable, krone exchange rate    Use of price regulation    An active business policy through state ownership and state grants and subsidies  The proposal to establish an incomes policy council did not receive support. Government regulation and coordinated wage regulation became excessive. 29  25  The collaboration between the authorities and bankers’ associations did not disappear completely. In the economic policy tightening of 1979 and 1980, the “konsumlånsforståelsen” (consumer loan understanding) played an important role. Banks undertook to reduce lending to households. This led to a marked rise in saving. 26  In Økonomisk Rapport Magasin, 12 January 2002: “Graver Gjedrem sin egen grav?” [Is Gjedrem digging his own grave?]. 27  Knut Getz Wold (1972): “Norges Banks samarbeid med statsmaktene, bankene og utlandet,” [Norges Bank’s cooperation with government authorities, the banks and bodies abroad],Kristofer Lehmkuhl Lecture, Norges Handelshøyskole 20 September. 28  See NOU [Official Norwegian Report] 1973:36. Om prisproblemene [On price problems]. 29  See NOU [Official Norwegian Report] 1983:36 Om prisproblemene [On price problems].