The first check stems from public supervisory powers: a characteristic common to all financial systems is the existence of prudential supervision. The second stems from minor shareholders and bank creditors (either holders of ordinary or subordinated debt, or mere depositors), who exert scrutiny in what we know as market discipline. I am sure that these arrangements sound familiar to you: they are the three pillars of the New Capital Accord, or Basel II. But the great worth of Basel II is precisely the acknowledgement that these three levels are part of the structure which, since the very inception of financial systems, has promoted sound banking systems. The three Pillars reflect well-known aspects of the workings of financial and banking systems over many years. And there lies the merit of Basel II. It has been able to identify these three elements and  4  BIS Review 31/2003  to integrate them so as to achieve regulation which is more closely aligned to the management of banks and which, therefore, is more efficient. Let me conclude my remarks by raising the issue of corporate governance and transparency in deposit institutions, including savings banks. One could argue against paying much attention to corporate governance in savings banks, based on the lack of a shareholder structure. I do not agree. First, we should never forget that the issue of corporate governance is related not just to the minority shareholder issue, but also to that of companies raising resources from capital markets.
Since the mid-1990s, a main purpose of the economic policy framework has been to shelter the economy from fluctuations in oil prices. The set-up of the Government Pension Fund Global and the fiscal rule for petroleum revenue spending is one important defence mechanism in this context. The government’s net cash flow from the petroleum industry is transferred in its entirety to the Government Pension Fund Global. A transfer from the Fund to cover a non-oil budget deficit requires a decision by the Norwegian parliament. In addition to preserving the real value of the Fund for the benefit of future generations, this set-up insulates the budget from short-term fluctuations in petroleum revenues. It also leaves space for fiscal policy to counteract economic downturns. In effect, since 2013, the increase in oil revenue spending has roughly matched the fall in oil investment. Monetary policy has also played a role. Our monetary policy is oriented towards low and stable inflation. The operational target of monetary policy is annual consumer price inflation of close to 2.5% over time. Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. With confidence in the inflation target among economic agents, monetary policy in Norway has been able to contribute to stabilising the business cycle. Lower income from oil exports following the fall in the oil price meant cost-competitiveness needed to improve. A floating exchange rate greatly facilitated this process.