Earlier this year, in February, the ESRB released a report on macroprudential policy for cyberresilience.12 The document encourages authorities across the EU to make progress on three elements: (i) cyber-resilience scenario testing; (ii) systemic impact tolerance objectives and (iii) financial crisis management tools to deal with system-wide cyber incidents. This area is still work in progress – it is still in its infancy, if I may put it that way – and for this reason the ESRB continues to work on an EU-wide strategy to help mitigate systemic cyber risk. The ESRB aims to act as a hub to share good practices and insights gained from members’ experience. Likewise, climate change is another overarching concern as it can contribute to the build-up of systemic risks. Climate risk is typically broken down into: (i) transition risk (the risk of an abrupt transition towards a greener economy) and (ii) physical risk (the risk of a rise in the frequency and intensity of natural catastrophes) – both affect financial institutions. Due to unique features, in particular its long-term horizon and uncertainty, climate risk may be inadequately priced by financial markets. Besides, it can be amplified by classic systemic risk externalities, such as system-wide common exposures and portfolio correlations, as well as spillovers across the financial system and the real economy. The ESRB, together with the ECB, published two reports, in 2020 and 2021, which have contributed to the assessment of the systemic impact of climate risk, including via stress tests and scenario analyses.

In comparison with other countries, productivity gains in banks and other service sectors stand out in particular. Examples are automated processes and swifter payments in the financial industry, and improved inventory and management systems in commerce and transport. This reduces production costs. The business sector is quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due to the modernisation in the 1980s and 1990s of the way the economy functions, which resulted in more efficient markets. Although satisfactory current statistics for central government and local government productivity are not available, government agencies have probably also become more efficient. New technology and new organisational structures have certainly provided opportunities to increase efficiency. Third, an ample supply of foreign labour has been an important factor behind output growth. In particular, the supply of foreign labour has increased sharply after EU enlargement in 2004. Improved terms of trade, high productivity growth in the Norwegian business sector and the increase in labour supply have resulted in a favourable environment for the Norwegian economy. Unemployment has declined considerably and is now very low. The labour market is tight. Unemployment has not been as low since the second half of the 1980s, and employment has risen sharply this year. Wage-earners and enterprises have both fared well. Cheap imported goods have resulted in a subdued rise in consumer prices and a substantial increase in wage-earners’ real wages. High export prices have restrained the rise in real labour costs.