This pattern reflects the expectation that, in an environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should remain modest. The Governing Council continues to view the risks to the medium-term outlook for price developments as broadly balanced. On the upside, the main risks relate to further increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years, and possible increases in commodity prices. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. Turning to the monetary analysis, taking the appropriate medium-term perspective, the underlying pace of monetary expansion continues to be moderate. The annual growth rate of M3 decreased to 2.0% in November 2011, after 2.6% in October. As in the previous three months, monetary developments in November were affected by the heightened uncertainty in financial markets. The annual growth rate of loans to the private sector, adjusted for loan sales and securitisation, decreased to 1.9% in November, from 3.0% in October. The annual growth rates of loans to non-financial corporations and loans to households, adjusted for loan sales and securitisation, both moderated in November, and stood at 1.8% and 2.3% respectively, with slightly negative monthly flows observed for MFI loans to non-financial corporations.
On top of this system, banks or similar credit institutions can create money by lending, more or less as they do today. But it is uncertain how credit institutions will behave in a more decentralised system such as this one. It also raises new questions about where the responsibility for licensing and regulation should lie, especially if the system operates independently of national borders. This poses a risk of increased instability and more frequent crisis. Norges Bank’s role Chart: Norges Bank is tasked with ensuring: Norges Bank plays a key role in the financial system. Norges Bank is responsible for keeping inflation low and stable. That secures confidence in the Norwegian krone. We are also responsible for promoting financial stability and an efficient and secure payment system. Banks settle obligations between themselves over accounts in the central bank. If necessary, we can 5/7  BIS central bankers' speeches  provide banks with additional liquidity. At the same time, our role as the bankers’ bank gives us a channel into the wider economy, which we use to implement monetary policy. A change in our policy rate will pass through to banks’ lending and deposit rates. Norges Bank closely monitors developments in the banking industry and the financial system. Innovation and competition can bring better and cheaper services, but can also bring risks associated with, for example, cybercrime, data protection and financial stability. There is also the risk that some participants gain substantial market power.