Capacity utilisation in the business sector is high and a growing number of enterprises are now facing constraints. Statistics Norway’s business tendency survey for the third quarter shows that Norwegian manufacturing is optimistic about the prospects ahead. A clear majority of industrial leaders assess the general outlook as more positive in the short-term than in the third quarter. A majority of industrial leaders are considering an increase in investment. A shortage of skilled labour is posing a mounting challenge to manufacturing in the period ahead. This picture is consistent with information from the company contacts in Norges Bank’s regional network. In the August round of interviews, 59 per cent of the companies reported capacity problems, and this share has increased since the previous round. Output and employment are increasing in all sectors. Pressures are particularly strong in the building and construction sector and some corporate services. The rise in prices is moderate in retail trade. It also appears that extensive use of foreign contract labour, particularly in some manufacturing sectors and building and construction, is curbing wage growth. An increasing number of our company contacts report labour shortages, particularly a shortage of engineers, project managers, transport workers and skilled labour in corporate services. Labour shortages are also beginning to emerge in retail trade and household services. High demand for labour has resulted in a marked decline in unemployment so far this year. Unemployment is now in line with the unemployment level during the previous expansion at the end of the 1990s.

The conference  Nearly twenty years ago, Jacob Frenkel made the following observation about the international monetary system: “academics and policymakers have made numerous proposals for reform while, at the same time, the monetary system itself has been in a constant state of change”. This points to another problem that any attempt to reform the international monetary system faces: the world economy and financial markets, and therefore the international monetary system never cease to evolve. Today’s conference is organized around four panel discussions. They will focus on issues that are at the forefront of the current debate on shortcomings of the international monetary system. The first panel, chaired by Axel Weber, will discuss the predominant concerns about the present system. Large global imbalances, volatile capital flows, and rapid reserve accumulation give rise to concerns about vulnerabilities. Are they possible sources of instability, and what reforms, if any, should be considered? As I pointed out earlier, one recurring theme in the debate has been the question of reserve assets. Our second panel, chaired by George Soros, will examine ways to improve the supply of reserve assets. Is a diversification of reserve assets desirable, and if so, should it be actively promoted? Is there a greater role for SDRs in the international monetary system, and if so, what reforms would be required to give SDRs a greater role? Over the past decades, private capital flows have greatly increased. Although capital account liberalization is clearly beneficial in the long run, it entails significant short-run vulnerabilities.