23  Tore Jørgen Hanisch, Espen Søilen and Gunhild Ecklund (1999): Norsk økonomisk politikk i det 20. århundre. Verdivalg i en åpen økonomi [Norwegian economic history in the 20th century. Ethical choices in an open economy] Høyskoleforlaget, Kristiansand. 24  The 1965 Credit Act and the 1950 Act relating to currency control were not repealed in their entirety until 2003. 6  BIS Review 154/2010  authority on the government, Norges Bank gradually drifted into an advisory role. Corporatist collaboration receded somewhat into the background and credit policy was integrated into the national budget. 25 This was probably an all-time low for Norges Bank. The Bank was not allowed to act, while inflation gained momentum. When Hermod Skånland began working in Norges Bank as deputy governor in 1971, he was warned by his colleagues at the Ministry of Finance. Later, he said: “... they did not know how right they were to ask their questions. They [had no idea] how little there was to do of any interest in Norges Bank at that time. It had no instruments, no policy tasks and was wholly and exclusively a supervisory body – apart from the few occasions when it served as a consultative body.
In this latter context banks have traditionally played a key role in financing the corporate and household sectors, earning their return by gathering information about, and assessing and monitoring, the creditworthiness of private sector borrowers, especially those who do not or cannot cost-effectively provide the comprehensive, public, information that would allow them to access the capital markets. Much of the banks’ lending, while nominally at short-term, for example in the form of callable overdrafts, is in practice illiquid and non-marketable. So a further  BIS Review 13/1997  -2-  distinctive characteristic of banks is that they typically function with a mismatch between their highly liquid liabilities and their less liquid, non-marketable, assets. There is no need, I think, to labour the importance to the economy as a whole of these distinctive banking functions, or the damage that would be caused if the banks’ role - as the repository of liquidity, as the core payments mechanism, and as the principal source of finance to at least a large part of the economy - were seriously interrupted. That in itself helps to explain the public interest in the effective functioning of the banking system, or why banks collectively have been regarded as special. But beyond that, the distinctive banking characteristics that I have described, of liquid liabilities and less liquid assets, give rise to special needs. Given the banks’ role in the payments system they may need late access to liquidity to square their positions vis-à-vis each other after executing payments instructions on behalf of their customers.