Svein Gjedrem: Monetary policy in Norway  Opening remarks by Mr Svein Gjedrem, Governor of the Norges Bank, to Norges Bank workshop on “The Conduct of Monetary Policy in Open Economies”, held in Oslo, on 26-27 October 2000. *  *  *  Introduction I am happy to welcome you to this workshop on “The conduct of monetary policy in open economies”. The workshop brings together researchers and practitioners of monetary policy from a wide variety of countries. The aim is to stimulate exchanges both across countries and between researchers and monetary policymakers on a topic of common interest. Research on monetary policy is an international field. We thus find it tremendously useful to be a part of an international network of researchers and practitioners concerned with monetary policymaking. Contact across central banks does represent an important source of inspiration to the policy discussions in Norges Bank. Norwegian monetary policy The papers presented at this workshop address topics that are highly relevant to monetary policy in general and Norwegian monetary policy in particular. Some of you may be familiar with the Norwegian system. For others it may be unknown that Norway has a monetary policy regime that is unique in an international context: it is a system of neither a fixed exchange rate nor an inflation target. Let me explain in more detail: The political authorities formulate Norges Bank’s mandate for the conduct of monetary policy.
The financial crisis showed that the entry of foreign banking groups into a domestic market, besides advantages, it is also associated with elements of risk, which must be addressed duly and timely. Third, the countries in our region have different needs for investments, highlighting those in road infrastructure, energy and health care. Also, demographic developments, including migration, and slowing population growth trend, have brought about increased costs of public pension schemes and other elements of social protection. Therefore, despite fiscal consolidation efforts, budget deficits have been present and steady all the time. During the financial crisis period, public authorities were committed to overcoming the situation. Almost all governments of the countries in the region were committed to implementing fiscal stimulus policies, aimed at increasing the support to the real economy and the financial system. Monetary policy followed an easing trend, cutting the interest rates and satisfying the interbank market needs for liquidity. Back to Albania’s case, I would like to emphasize that our experience in absorbing the impacts of the crisis proved successful. Albania, I think, is one of the countries that:   Did not experience any bank failure or capital injection by the state;    Courageously withstood the crisis of confidence in the banking system, where financial intermediation was never interrupted;    The economy continued to grow in positive terms, albeit at a slower pace;    Inflationary expectations remained anchored throughout all time.