Releasing the liquidity standard in times of stress could communicate authorities’ views on banks’ forward-looking liquidity resilience and  Page 11  appropriate usage of liquidity buffers, supporting financial stability and market confidence. But while the principle may be similar, in practice there may be bespoke challenges to releasing liquidity standards via the LCR. As I discussed earlier, it is an incomplete, static metric, which can mean different things for banks’ liquidity in different scenarios. But it is the existing regulatory standard. So in considering how to release liquidity standards, we would need to be mindful of the challenges posed by the nature of the LCR metric, and that in some stresses releasing the LCR may not be the right policy. These challenges motivate broader consideration of whether and how we might improve the LCR metric itself to make it less cyclical and volatile. For example, we could explore a less cyclical approach to calibrating the potential liquidity outflows from margin calls stemming from an increase in market volatility during a time of stress. There may also be other options for improving usability that worth exploring, but there are unlikely to be any silver bullets – we will need to be mindful of the potential issues and inherent trade-offs that different options entail.
This level will still provide solid profitability for many investment projects in the petroleum sector and continued large surpluses on the current account and in government finances. The krone exchange rate, measured against our most important trading partners, has appreciated by about 7 per cent since the spring of 2000. However, the krone exchange rate is about 2.5 per cent weaker than in 1990 and at the same level as in the mid-1990s. Traditional merchandise exports remained high in the first half of 2001 but exhibited a weaker trend in the second half of the year. Foreign trade figures for the fourth quarter of 2001 indicate that the decline in export volumes may have come to a halt, although export prices are still falling. Consumption indicators suggest strong growth in private consumption. Credit growth has slowed somewhat due to reduced borrowing by enterprises. Household borrowing, on the other hand, has increased further. Developments in debt may also influence financial stability. Although borrowing by enterprises appears to be declining, their debt burden remains high. This reduces enterprises’ ability to cope with downturns. The household debt burden is increasing, but the level is low. These developments are due in particular to the housing market, with high turnover and high price rises. Experience shows that private sector debt tends to increase at a particularly fast pace during upturns. Higher asset prices may be a driving force.