Period averages conceal large, long-lasting swings in growth over time (Chart 4). Their revised measures suggest growth did not flat-line prior to 1750, even though it averaged zero. Rather, growth oscillated wildly. Second, given the scale and duration of these oscillations, they decompose their growth data into “expanding” and “contracting” periods. Chart 5 plots these for the UK over the past 700 years. A broadly similar pattern of expanding and contracting periods can be found in Spain, France, Italy, Portugal, and the Netherlands over roughly the same period. This decomposition changes the growth story radically. Even prior to the Industrial Revolution, economies experienced notable periods of strongly positive growth. Between 1300 and 1700, GDP expanded slightly more than half the time. Over these expanding periods, growth averaged 5.3% per year. The reason average growth was far-lower over this earlier period – indeed,  18 19 20  Solow (1956), Mincer (1984), Romer (1990), Iyer, Kitson and Toh (2005), North (1990). Haldane (2015a). Broadberry and Wallis (2017). 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  little more than zero – was because expanding periods were almost exactly offset by contracting periods. They accounted for slightly less than half the period, during which growth averaged minus 5.4% per year. So what has changed in the period since the Industrial Revolution? Growth during expansion periods is relatively little changed. Since 1750, it has averaged 3.2% per year. That is in fact a bit less than growth during expansion periods prior to the Industrial Revolution.

There is consensus that this model has given rise to substantial results, not least an infrastructure which safeguards important social considerations, while also providing for active competition between participants. The challenge for Norges Bank will be to fulfil its licensing and supervisory responsibility in such a way that self-regulation may be maintained, but which also allows us to move in the right direction in terms of both risk (reduction) and efficiency in the interbank systems. 4.2. Norges Bank’s responsibility  That Norges Bank has responsibility in connection with the payment system is not new to this bill. Under the Norges Bank Act, Norges Bank shall promote an efficient payment system domestically as well as vis-à-vis other countries. This formulation requires us to balance risk against efficiency. Norges Bank also serves as settlement bank for the banks. Norges Bank has, as a result of this function, set requirements on the banks and their clearing systems, with particular emphasis on risk-reducing measures. As a future licensing authority for the interbank systems, we will have to strike a balance between risk and efficiency in our assessment of the systems. In the following, I will provide a few observations on our new responsibility before commenting on the licensing process itself and the requirements which must be placed on the systems. Given that the law has not yet been adopted, this is of course somewhat speculative. We are highly aware that the law is to be supplementary to the approach of self-regulation.