Finland responded by devaluing its currency by 6 per cent. In Norway, industrial leaders and industry organisations also pressed in favour of a devaluation of the Norwegian krone. Norway’s finance minister Rolf Presthus characterised the Swedish decision as a serious setback for Nordic cooperation3, and chose not to change the value of the Norwegian krone. In much of the 1970s and 1980s, economic policy in Norway and Sweden lacked a long-term approach and credibility. This contributed to wide swings in production and employment. With a policy of low interest rates and devaluation, inflation became entrenched at a high level. Frequent devaluations in the period following 1976 could not prevent a weakening of the manufacturing sector in the long run. On the contrary, they proved to be self-reinforcing. The wide fluctuations culminated in a borrowing spree that started in the mid-1980s, first in Norway and then in Sweden. The borrowing spree was succeeded by deep economic crises. Both Norway and Sweden had to abandon their fixed exchange rate policy in 1992. Important reasons were freer capital flows, deeper financial markets and hence a surge in cross-border capital movements. Sweden switched to inflation targeting in 1993 and was among the first countries to introduce a system that would later become the norm for small and medium-sized economies. The Riksbank succeeded fairly quickly in anchoring inflation expectations and keeping inflation low and stable in Sweden. Norway followed suit in March 2001.

Similar centralised solutions also exist for the settlement of foreign exchange and securities transactions. Society could possibly benefit greatly from replacing the existing infrastructure with more decentralised solutions, for instance based on so-called Blockchain technology. Such solutions were first used when the digital currency Bitcoin came onto the market in 2009. Such freestanding digital currencies face a series of challenges, such as significant price volatility, safety issues and pressures on IT resources. Experience shows that the public can easily lose confidence in such currencies and their payment systems, which are not backed by a central bank or a government deposit insurance scheme. Recently, the international debate has shifted focus away from freestanding digital currencies to other uses and the underlying technology. Decentralised systems are peer-to-peer networks where transactions are made directly between participants. They each have an identical copy of the account system or ledger, which is updated continuously. As the ledger is distributed among incumbents, central operators or intermediaries are not needed to undertake the operations. This also provides potential for faster and cheaper settlement. Public confidence and safety rely on encryption. It should not be possible to manipulate the ledger and transactions, and funds cannot be used more than once. It goes without saying that the quality of the security solutions is absolutely essential. The decentralised technology can potentially be used in many areas. Besides the financial sector, proposed uses include registration of property and objects of value and in elections.