Mr Gjedrem considers challenges to economic policy in Norway Address by the Governor of the Central Bank of Norway, Mr Svein Gjedrem, at Gausdal on 28/1/99. 1) Economic policy in Norway In Norway, fiscal policy has been an important economic policy component for stabilising the demand for goods and services. Since 1994, monetary and exchange rate policy have been oriented towards maintaining a stable exchange rate against European currencies. The social partners are responsible for negotiating wages and thereby have a substantial influence on employment. From 1986 to December 1992, Norway operated a fixed exchange rate regime. The fixed exchange rate policy introduced in the summer of 1986 served as a nominal anchor for economic policy, and inflation was gradually brought under control. This process was associated with considerable real economic costs in the form of idle production capacity in the period 1988-1992. However, the cost of stabilising the economy was hardly greater in Norway than in countries experiencing a comparable situation. On the contrary, Norway avoided the sustained increase in structural unemployment and the persistent deterioration in government finances experienced by many European countries in the 1980s and 1990s, and which they are carrying with them into the next decade. Norway’s policy laid the foundation for balanced and broad-based economic growth in the years after 1992. Following the decision to allow the krone to float on 10 December 1992, the guidelines for monetary policy were revised. Monetary policy was subsequently oriented towards exchange rate stability, but without stipulating a central rate with fluctuation margins.

Yes, it is true that corporate HK dollar bond market is small, thanks to the success of the Linked Exchange Rate System which enables our corporations to tap into the much deeper investor pool of US dollar bond markets without much currency risk or hedging costs. But as revealed in a recent report by the International Capital Markets Association (ICMA), Hong Kong is actually the largest centre for arranging Asian international bond issuance, capturing 34% (or $ billion) of Asian international bonds in 2020, followed by the US (18%), the UK (17%) and Singapore (5%). 8. Hong Kong is also well ahead of other major international financial centres in terms of arranging first-time bond issuance, capturing 75% $ billion) of the Asian market versus Singapore (9%) and the UK (5%). Issuers and investors alike are well served by our comprehensive financial ecosystem underpinned by free flow of capital, an internationallyaligned common law system and regulatory environment, and the presence of world-class professional services with talents from all over the world. 1/4  BIS central bankers' speeches  9. All these mean that Hong Kong is well placed to serve as a centre for Asian structured financing just like other financial intermediation that we are doing, as this market continues to mature in this part of the world. 10. The macro trends are also supportive. With the record low interest rates and abundant liquidity in many advanced economies, investors are keen to look for some decent yields for their investments.