Perhaps due to location and transport links, Denmark is a centre for trade and the location for the Nordic headquarters of a number of international companies. The Norwegian enterprise sector, on the other hand, is heavily influenced by our natural resources. 3  BIS Review 78/2000  3. Monetary and financial stability  I would now like to address the key objectives of most central banks: monetary and financial stability. What do these two terms mean? Monetary stability is interpreted somewhat differently in various countries. The most common definition is price stability - that is to say the stability of the internal value of money. Sometimes it is interpreted as exchange rate stability - in other words the stability of the external value of domestic money. Finland, Sweden and Norway all experienced severe banking crises in the early 1990s. Most people in these countries have a clear idea of what a financial crisis is. In a sense, financial stability is the absence of financial crises. A robust financial system has solid cushions that reduce the risk of problems spreading from one institution or market to other institutions or markets, or across borders. This risk constitutes a systemic risk, which is the risk of failure of the financial system. Disturbances that might develop into a systemic risk can be transmitted through financial institutions and financial markets. Robust institutions and stable markets are thus important. Robust institutions are solid institutions that enjoy general confidence. Stable markets are markets where there are no “excessive” price variations.
A gradual recovery should commence in the second part, with export growth benefiting from a strengthening of global demand and domestic demand being supported by our accommodative monetary policy stance. Furthermore, the improvements in financial markets since July last year and the continued implementation of structural reforms should work their way through to the economy. At the same time, necessary balance sheet adjustments in the public and private sectors, and the associated tight credit conditions, will continue to weigh on economic activity. This assessment is also reflected in the March 2013 ECB staff macroeconomic projections for the euro area, which foresee average annual real GDP growth in a range between –0.9% and –0.1% in 2013 and between 0.0% and 2.0% in 2014. Compared with the December 2012 Eurosystem staff macroeconomic projections, the ranges have been revised slightly  BIS central bankers’ speeches  1  downwards. The revision for 2013 mainly reflects a more negative carry-over effect from the outcome for real GDP in the fourth quarter of 2012, while the projected path of the recovery has remained broadly unchanged. The Governing Council continues to see downside risks surrounding the economic outlook for the euro area. The risks relate to the possibility of weaker than expected domestic demand and exports and to slow or insufficient implementation of structural reforms in the euro area. These factors have the potential to dampen the improvement in confidence and thereby delay the recovery.