Kredittilsynet’s analyses showed that Norwegian banks are not directly exposed to the subprime market and that they have limited exposure to hedge funds. Norwegian banks have some indirect exposure through their regular connections with foreign banks and credit institutions that are more exposed to subprime mortgages and hedge funds than their Norwegian counterparts. However, general liquidity problems in international money markets might also affect Norwegian banks and lead to higher funding costs. To some extent, this has in fact happened. Norwegian money market rates have risen relative to the risk-free interest rate, but less than in the major economies. It is uncertain how sensitive risk premia will be in the event of higher demand for funding. The price of obtaining dollar liquidity seems to have increased, and this also affects Norwegian banks. Since the end of June, the yield curve in the Norwegian money market has become steeper at the short end. Two- and three-month rates have risen more than the other money market rates in this period. We do not know how long the turbulence will last or what the consequences will be for the real economy. So far, the turbulence has not resulted in substantial reassessments of the international outlook for economic growth. The OECD has revised down its growth estimates for 2007 somewhat, particularly for the US and some European countries, and the IMF has indicated that it will do the same.
It must also be expected that there will be strong focus on liquidity risk by financial institutions and supervisory authorities, and not least in the work on international regulations in the period ahead. Thank you for your attention. BIS Review 100/2007  7  8  BIS Review 100/2007  BIS Review 100/2007  9  10  BIS Review 100/2007  BIS Review 100/2007  11  12  BIS Review 100/2007  BIS Review 100/2007  13  14  BIS Review 100/2007  BIS Review 100/2007  15  16  BIS Review 100/2007  BIS Review 100/2007  17