This may involve a degree of reliance on head office compliance or the bringing in of outside support - both of which may be necessary, but both require care in how they are used. What are the implications for ongoing monitoring, when technical experts fly in and fly out? If certain compliance tasks are outsourced, is bank management providing effective oversight? Vendors must be scrutinized and, very simply, outsourcing cannot diminish, in any way, the firm’s accountability. These objectives may be met through a variety of organizational models, depending on factors such as the size and nature of each bank’s businesses, its geographical scope, its culture and existing reporting lines, and the legal and regulatory framework in which it operates. There is no “one-size-fitsall” organizational model that we require or even expect. Implications for supervisory authorities Let me now offer a few key principles for the way in which supervisors should be carrying out their responsibilities. First, supervisory authorities have a responsibility to establish clear regulatory requirements, supported by industry and examiner guidance. The goal is to have well-structured rules that implement legal requirements, supplemented by guidance outlining where and how discretion may be exercised. Second, supervisors should employ judgment in how they deal with problems that are found.
The central government invests this amount abroad through the Petroleum Fund. This results in capital outflows and a balance-of-payments surplus. The central government builds up assets, but also obligations through the social security system. Even if a large share of oil revenues is set aside, it would appear that, in the long term, the level of direct and indirect taxes will have to be at least maintained in order to honour these obligations. Petroleum revenues would normally have resulted in substantial currency inflows into Norway. If we had used this capital domestically, we would have had to convert this currency into NOK. The attendant increase in demand for kroner would have resulted in an even sharper appreciation of the krone exchange rate. The capital outflow through the Petroleum Fund contributes to curbing the appreciation of the krone. With oil and gas production now reaching its peak, Norway has - and must have - a substantial balance-of-payments surplus. The return on the Petroleum Fund will to some extent make up for the fall in petroleum revenues in the period ahead. In about 15 years, the return on the Fund may exceed the cash flow from petroleum activities. Norway’s position as international investor may then overshadow its position as an oil and gas producer. Swings in capital markets may have a greater impact on central government finances than oil price fluctuations. We are now in a phase where petroleum wealth is being invested at home and abroad. Norway is and has to be - an international investor.