Recent developments nevertheless suggest that we have become more dependent on the return on those assets for financing tomorrow’s imports (Chart 16). 15  NORGES BANK  Chart 16 Growing dependence on the GPFG. Share of mainland GDP. Percent 13  13  12  12  11  11  10  10  9  9  8  8 7  7 Trade deficit excluding oil and gas 3 percent of the GPFG  6  6  5  5  4  4  3 2000  ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  2005  2010  2015  2020  2025  2030  2035  3 2040  Sources: Ministry of Finance and Statistics Norway  Measured as a share of mainland GDP, the trade deficit is larger than the expected return on the GPFG further ahead. It should be noted, however, that a substantial share of Norway’s goods and services imports is related to activity on the Norwegian shelf. These imports will decline as oil activities wind down. On the other hand, lower oil prices or a decline in global equity markets will reduce the expected return on the GPFG. Moreover, the trade deficit has shown a substantial increase in a period where both demand in the Norwegian oil industry and the krone have weakened. For many years, Norwegian companies could afford to pay much higher wages than companies in neighbouring countries.
The most important result of international efforts aiming at sound financial markets was the approval of modern risk management techniques as a part of regular financial intermediation process. In this context the Basel II, the new capital adequacy framework, is a very important outcome of the action taken in the international arena. Although, the main aim of the original Basel Accord, which was applying institutionalized and international standards to the global financial system, has not changed in the Basel II Accord, the Basel II puts more emphasis on the risk management aspect of the financial intermediation process. It is expected that a sound and resilient risk management in the banking sector would also lead to more efficient risk management in the real sector. Therefore, in this way, as the financial system becomes more stable, less pro-cyclical and reinforced against shocks, more sources will be available for the real sector. However, it should also be considered that healthy and efficient risk management requires more than the three main pillars of the Basel II Accord. A good understanding of the risks that a financial institution might encounter, a clear definition of risk taking procedures, compliance of risk taking decisions with the strategic goals of the institution, ensuring the risks are within the limits that were set by the management and adequate capital for given risk structure are other essential elements for a more significant advance in risk management in financial institutions.