35 MAS issued a consultation paper earlier this week with proposals on the safeguards for retail investors in unconventional investment schemes. Let me elaborate here on our thinking and rationale. 36 Many retail consumers have ventured into unconventional and unregulated financial products promising higher yields. But these products may also entail risks that are not well understood by retail investors. MAS has therefore decided to extend to these unconventional products regulatory safeguards that apply to capital markets. 37 In extending boundaries of regulation, we are guided by the need to balance costs and benefits. •  If we take too broad-brush an approach, we could end up regulating all commercial arrangements involving some form of investment return. For example, buying gold jewellery or piece of art that could appreciate in value over time. This will only add to costs without advancing consumer interests. •  But if we craft the regulatory framework too narrowly, products may be deliberately structured to fall outside the regulatory perimeter. For example, restricting regulation to land-banking arrangements will fail to capture other schemes operating on similar premises, such as investments in ostrich farms or in plantations. 4  BIS central bankers’ speeches  38 Therefore, taking into account market developments in Singapore, MAS will selectively enhance regulatory safeguards for retail investors in buy-back arrangements involving precious metals, which has the same economic effect as borrowing cash from customers; and collectively managed investment schemes. The latter includes land-banking and forestry schemes.

However, in view of the high level of unsold homes and properties in the US, it is uncertain whether the interest rate weapon will be as powerful as in the past. Thus, there is a risk that the US economy is entering into a downturn in spite of the interest rate cuts. Should weaker developments in the US lead to a broad-based pause in global growth, there may be a number of repercussions for the Norwegian economy. First, a downturn in the world economy may adversely affect activity and profitability in export industries and perhaps even the oil sector. It may be more difficult to sell goods in a falling market, and prices for domestically produced goods may fall. Second, turbulence and weaker growth prospects may increase uncertainty among Norwegian households and businesses. As a result, new projects and investments may be postponed, or enterprises may be reluctant to recruit new employees. Third, the financial market turbulence has a more direct impact on the business sector. Banks and investors now apply a higher premium and higher prices for providing capital for acquisitions, restructuring and investment, and highly leveraged companies have to pay high loan risk premiums. Falling external interest rates have resulted in a wider interest rate differential against other countries. This may lead to a stronger krone, but there are also opposing forces in the foreign exchange market. In the long run, the krone exchange rate is determined by changes in the terms of trade and permanent differences between domestic and external inflation and productivity.