There has been a gradual increase in support for the view that it is natural to set central banks straightforward targets which are suited to the instruments they use, and to strengthen their independence to take action and their financial independence while at the same time making firm requirements about transparency and accountability towards the government and general public. Treasury access to central bank funding was closed. Simple target-setting for central banks largely involved assigning a single main objective to monetary policy, i.e. to promote price stability, which means a low level of measured inflation. In some countries, central banks were assigned the task of defining their own main objectives, but elsewhere this was done by governments, or in cooperation between the government and the central bank. These viewpoints are reflected in central bank legislation of many countries and in the Maastricht Treaty’s provisions for the establishment and activities of the European Central Bank. Another widespread central bank objective in recent years has been to contribute to the stability of the financial system, including payments systems. Many central banks have been devoting increasingly more scope to this topic, reflecting the need which has been identified following the deregulation of international capital movements. At global level, a much higher profile has been given to active monitoring of financial activities and maintaining an active overview of various risk factors in financial systems and the economy as a whole, in order to attempt to prevent serious shocks.

Indeed, the new legislation states that the Central Bank shall, at no less frequent than quarterly intervals, publish reports on its monetary policy and monetary, exchange rate and foreign exchange developments and its measures in these areas. The Central Bank shall also issue an annual report in which it explains in detail its activities. In its annual report, the Bank outlines various other aspects of its operations and publishes a detailed itemised account of its operating expenses, more detailed, I believe, than any other institution in Iceland. To cite an example of the importance of transparency these days, in autumn 1999 the International Monetary Fund published guidelines for transparency of monetary policy which it firmly urged all member countries to adopt. The Central Bank of Iceland can definitely be said to fulfil these rules. By providing detailed descriptions of its policies and assessments of the economic and monetary situation and outlook, the Bank also contributes to professional and informed public debate on these issues. By the same token, greater responsibility is imposed on other commentators, since they have less scope for claiming lack of information. The Central Bank wholeheartedly welcomes professional public debate about the Bank and its policies, and takes part in such dialogue where it sees grounds for doing so. Lively, professional dialogue produces even greater understanding of the character and objectives of monetary policy. I hope to see students and teachers at the Faculty of Economics and Business Administration becoming involved in these issues in the future.