The credit institutions need only comply with the minimum reserve requirement on average within the reserve period. This contributes to the stabilisation of money market developments. A key element for the functioning of the operational framework has been the TARGET payment system. This payment system interlinks the 15 national real-time gross settlement systems and the ECB’s payment system, by providing a uniform platform for the processing of crossborder payments in real time. It has allowed a single interbank market interest rate across the euro area to prevail. Overall, the operational framework of the Eurosystem has proved efficient in providing liquidity to the banking system. This does not mean that this framework is rigid. On the contrary, it must adapt to the situation and evolution of the money market in the euro area. In this regard, the Eurosystem switched from a fixed to a variable rate tender for its refinancing operations on 8 June 2000. Let me make clear that this technical decision does not in any way modify the stance of the Eurosystem’s monetary policy, nor does it preclude renewed use of fixed rate tenders in the future. The sole aim of this  BIS Review 58/2000  2  changeover is to address the severe overbidding problem which developed in the context of the fixed rate tender procedure. Monetary and economic developments in the euro area Turning from theory to practice, I shall now consider current monetary and economic developments in the euro area.
Developments in the 1970s and 1980s showed that a higher rise in costs in Norway relative to other countries leads to a slacker labour market. This will also be the case this time. 5) Pressures on the exchange rate of commodity-based economies There is a correlation between price inflation and the exchange rate. As mentioned, the exchange rate has a significant influence on prices and costs through its effect on import prices. Furthermore, a precondition for maintaining a stable exchange rate against European countries is that inflation in Norway is over time on a par with the inflation rate prevailing in these countries. The high rise in costs in 1998 was probably the main factor that weakened confidence in the krone. International conditions also played a significant part. In 1998, the world economy was hit by the financial crisis in Asia, Russia and Brazil, falling commodity prices and widespread unrest in international financial markets. The Asian crisis proved to be more serious and prolonged than envisaged, and the contagion effects were more severe than most observers had anticipated. Weaker global demand contributed to a sharp fall in commodity prices, which in turn had a severe impact on commodity-based economies such as Norway, Canada, New Zealand and Australia. For all these countries, the terms of trade worsened and exchange rates depreciated. The Asian crisis also made investors more cautious, with an outflow of investment from countries perceived as risky.