This emergency compromise has shifted the focus away from structural reforms, which guarantee rebalancing through the increase of income. Often, the perspective of economic policies does not extend beyond some quarters ahead, while a much longer time vision should be considered. The anchoring of the future should start from the present. The actual philosophy of stabilising policies is based on past experiences with the hope that the current crisis is similar to previous ones. This reasoning has urged the authorities to insist on recycling stabilising measures. The time, however, shows that the global economy has undergone radical changes. The current crisis is happening as the global economic map is being redesigned in terms of economic size, geographic distribution of savings, debt, and trade and current balances. Advanced economies have traded positions with the emerging ones across all these dimensions. Consequently, old recipes do not provide an exit given that axioms on which they are based have changed. The solution of current and future challenges requires a new philosophy of thinking based on the new global reality. 2  BIS central bankers’ speeches  This reality, globalisation, is no longer a choice, but a fact that should be taken into account when formulating long-term development strategies. Turning to a regional setting, I think that this philosophy should be embraced and supported without hesitation. In order to make it more productive, we should be more opened to each other and take regional cooperation to new and higher levels.

Chart: Prices for European CO2 emission allowances Climate policy measures, such as higher carbon taxes, will also affect price and demand developments. Prices for European CO2 emission allowances have increased by close to 500 percent over the past two years. This has pulled up coal and gas prices in Europe and has also contributed to higher electricity prices in Norway. Even though the impact of climate change on aggregated economic variables will not necessarily be substantial in the next few years, the situation for individual businesses might be different. Norwegian firms will have to be prepared for the introduction of new climate mitigation measures and new, more environmentally friendly technology. Public attitudes and consumer demand patterns are also changing. Many of Norges Bank’s Regional Network contacts report that they are being affected by the increased focus on climate and sustainability.2 Statutory emission limits and customer demands are steering investment and production methods in a greener direction. A number of retail trade contacts reported that sales are declining because customers are increasingly focused on sustainability. The trend towards lower meat consumption has, on the other hand, given a boost to aquaculture and fish farming. Chart: Carbon pricing in Norway A number of industries are likely to have to comply with a stricter climate policy, particularly industries with low or zero carbon prices today. Stricter climate policy requirements may also speed up the introduction of new technologies. Some firms will have to undergo major changes, while others may gain competitive advantages.