Banks are thus facing a challenge with regard to a further scaling back of the physical distribution network. In general, financial institutions are facing considerable challenges in adapting to new technologies, intensified competition and globalisation. Substantial investments will probably be required to keep them competitive. Both management and employees will have to devote considerable attention to these aspects. The wrong solution or approach could weaken banks’ competitive position, profitability and financial strength. This may also have negative implications for financial stability. However, I don’t want to give you the impression it’s all doom and gloom. New technologies offer great opportunities for streamlining operations and improving efficiency. There should also be new business opportunities. Although the financial sector is undergoing fundamental changes, competent market participants should have every opportunity to thrive in a changing environment. 6. Consequences for the authorities  Developments in the financial sector also pose challenges for the authorities. Let me give you a few examples. The growth of complex financial conglomerates represents considerable challenges for supervision and crisis resolution. The international trend towards one national supervisory authority is probably advantageous in this respect. The Nordic countries have led the way here. The growth of institutions with a significant presence in several countries has increased the need for cooperation between the authorities of different countries. Bilateral and multilateral memorandums of BIS Review 78/2000  10  understanding are an important tool in this respect. The Nordic supervisory authorities have recently signed a joint memorandum of understanding. The activities of central banks are also influenced.

Svein Gjedrem: Developments in the Nordic financial industry a central banker’s perspective  Address by Mr Svein Gjedrem, Governor of the Norges Bank, at the Nordic Financial Services Conference, held in Stockholm, on 18 September 2000. * 1. *  *  Introduction  What is the future of the Nordic financial services industry? Who are the winners in the consolidation process? What is the potential of e-business and the Internet? This is just a sample of the important and challenging questions that will be discussed at this conference. Fortunately, it is the task of my fellow speakers - and not mine - to try to answer them. Given their background as significant market participants, I am sure that they will provide us with some valuable insights. Today, most central banks follow structural developments in the financial sector from the sidelines. This has not always been the case. The post-war period was characterised by heavy regulation. The domestic authorities controlled market prices, financial flows and the structure of the financial sector. There was little foreign influence. Gradually, markets were deregulated and became more internationally integrated. The central banks’ main instrument is now the setting of interest rates. The main objectives of central banks have stayed the same: monetary and financial stability. Although deregulation is now completed in the industrialised countries, its full impact on the financial structure remains to be seen. In addition, technological developments, internationalisation and increased focus on shareholder value are creating pressures for structural change.