This could be illustrated on the table describing developments in the Czech Republic, Poland and Hungary in terms of inflation and GDP growth: 1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  2002  CPI Czech R. Poland Hungary  52,0 60,3 35,0  12,7 44,6 23,0  18,2 37,7 21,9  10,2 29,4 21,6  7,9 21,8 29,2  8,6 18,8 20,3  10,0 13,2 18,8  6,8 8,4 10,5  2,5 9,8 11,4  4,0 8,6 10,2  4,1 3,6 6,8  0,6 0,8 4,8  GDP Czech R. Poland Hungary  –11,6 –7,0 –11,9  –0,5 2,6 –3,1  0,1 3,8 –0,6  2,2 5,2 2,9  5,9 7,0 1,5  4,3 6,0 1,3  –0,8 6,8 4,6  –1,0 4,8 4,9  0,5 4,1 4,2  3,3 4,0 5,2  3,1 1,0 3,8  2,0 1,4 3,3  EIU Country data, national statistics  As already mentioned, since the financial sector consisted mainly of the banking sector, the impact of economic reform was felt mainly by the banks. There was no alternative source of financing for corporations, so difficulties in the corporate sector were passed on directly to the banks. The situation was complicated more by the fact that the government owned some of the most important corporations, as well as the main banks. Political rationale preceded economics. In most of the countries, the privatization of most firms happened early in the transformation process.
The Government has also provided increased loans and guarantees to Norwegian export industries, and has raised lending limits for state banks. In addition, Folketrygdfondet (the Government Pension Fund – Norway) has been permitted to increase its purchases of bonds. 6  BIS Review 139/2009  The extraordinary monetary and liquidity measures implemented were tailored to a situation in which financial markets no longer functioned. In Norway, it has been appropriate to start winding down the unconventional measures earlier than in other countries: In recent months, Norges Bank has not supplied liquidity through the currency swap lines or liquidity in foreign currency. Loans in NOK at long maturities have not been provided since February. Surplus liquidity in the banking system was increased to more than NOK 100 billion, but is now close to a more normal level. This motivates banks to revert to money market funding. The swap arrangement involving covered bonds (OMF) in exchange for government securities has made an essential contribution to securing banks’ long-term funding. The first signs that the covered bond market was beginning to function appeared in spring. The minimum price in the swap arrangement has been raised by 0.9 percentage point, from NIBOR-0.2 percentage point to NIBOR+0.7 percentage point. Use of the arrangement is currently being phased out. Norges Bank eased its collateral requirements to enable banks to increase their borrowing in the central bank. This measure is now being reversed.