A very topical issue is how the accounting and auditing rules should be designed to create the best possible conditions for lenders and investors to form an opinion of a company’s future profits and ability to pay. It is never possible to completely prevent unlawful actions, but is there something that can be done to avoid such scandals as have arisen with the fall of Enron and Worldcom? Transparency must in any case be our guiding star! The present situation Finally, I should like to comment on the present situation. Quite contrary to what many feared, the downturn in economic activity following the unusually strong and prolonged upturn that was driven by the US economy appears to be moderate and short-lived. Growth appears to be on the way up already this year. The heavy fall on the stock markets, terrorist acts, the crisis in Argentina and the Enron affair do not seem to have had excessively negative effects on the global economy. There is still some uncertainty, particularly with regard to the capacity of the US economy to once again take on its role as engine for growth. This uncertainty is partly connected with whether we have really seen the entire downside of the financial bubble, and partly with the consequences of the terrorist attacks. Uncertainty has increased somewhat in recent weeks, but we can still assert that the turbulence in the financial markets does not appear to have had particularly major effects on the real economy. What could be the explanation for this?
A salient feature of the Norwegian economy is the importance of oil revenues, which may fluctuate considerably from year to year. The Government Petroleum Fund was established to serve as a buffer against fluctuations in oil revenues. It dampens the impact of changes in oil prices on the Norwegian krone. In recent years, a number of countries have switched to a monetary policy regime based on a target of low inflation. With a passive fiscal policy, monetary policy then in practice assumes a greater role in the stabilisation of economic developments. In Norway, we have a different institutional structure and monetary policy objective. When the krone has been stable and inflation shows signs of rising, Norges Bank’s first reaction is to inform the political authorities that measures other than those available to the central bank are required. Norges Bank would do the same if the requirement of returning the krone to its initial range could no longer apply. In a country with an inflation target, the central bank would deal with this itself, without first consulting with the government authorities. However, as mentioned, Norges Bank cannot with open eyes inflate or deflate the economy. Norges Bank’s mandate must be viewed in the light of the emphasis placed by the government authorities on conducting a disciplined, but active fiscal policy. The mandate gives Norges Bank a basis for conducting a monetary policy that provides a nominal anchor for the Norwegian economy.