Countries on the European continent have a regional approach to this. They have drawn up a set of laws and rules that govern a common European market, the single market. Norway also participates in this market by virtue of the EEA Agreement. European Monetary Union effectively removes the possibility of speculation between the currencies of the countries involved, thereby increasing the stability of the financial system in Europe. International rules for economic relations with other countries are important, particularly for small countries. Cooperation within the framework of the WTO and GATT agreement on trade in goods and services are examples of this. The OECD Capital Code, which provides a framework for member countries’ laws and regulations on capital movements is another example. Initiatives have been taken by both the International Monetary Fund and the Bank for International Settlements to create a new international regulatory framework and system. The aim of this work is to reduce the risk and effects of serious financial crises. One solution that will not be effective is the reimposition of direct capital controls, given the vast increase in technological capabilities to evade them. The business sector is already international. Capital controls are disadvantageous to the business sector in the countries that introduce them. International developments Turnarounds in the international economy are often abrupt. 1998 was marked by pessimism. The crisis-hit countries in Asia were struggling. Russia was faced with severe economic problems. Last year, only two years later, growth in the world economy reached the highest rate recorded in 15 years.

Svein Gjedrem: The global economy and Norwegian monetary policy Address by Mr Svein Gjedrem, Governor of the Norges Bank, at the Southern Norway Conference, Kristiansand, 6 March 2001. *  *  *  Introduction Over the past few centuries, Norway has been transformed from one of the poorest countries in Europe to one of the richest, thanks to its profits from international trade. Foreign capital was important for the utilisation of Norwegian natural resources. Cross-border capital flows have increased sharply, particularly in recent years. The chart shows Norwegian inward and outward direct investment. These are strategic investments involving ownership interests of 10 per cent or more, unlike portfolio investments that normally involve small stakes. Norwegian companies' direct investment came to NOK 74 billion last year. The figures were boosted by substantial acquisitions abroad by Telenor and Norske Skog. Over the past two years foreign companies' investment of this type in Norway came to around NOK 100 billion. Over time, Norwegian acquisitions abroad and foreign acquisitions in Norway are more or less balanced. BIS Review 19/2001  1  The state is accumulating substantial foreign assets through the Government Petroleum Fund. As result of these investments, Norway is in a net asset position vis-à-vis abroad. In addition Norwegian insurance companies and securities funds have markedly increased their foreign investments in recent years. At the same time, Norwegian banks finance a large share of their lending through foreign capital, and foreign investors are steadily increasing their share of Norwegian securities holdings.