The chart shows income on the horizontal axis, and health expenditure on the vertical axis. Norwegian health service expenditure is on a par with or higher than in that of other western countries, with the exception of the US, Germany and Switzerland. However, as a percentage of income, health expenditure in Norway is still not particularly high. A further reason for the situation outlined above might be the composition of the population. We know that in a few years health expenditure will rise sharply because of an ageing population. However, current demographic trends do not indicate particularly strong pressures. The challenges will increase considerably in the years ahead. Continued growth in incomes and an ageing population will boost demand for health and care services. Moreover, it will be possible to offer services and forms of treatment that are not available today. All this has to be provided for within tight personnel and budget constraints. The increase in social security expenditure on pensions will lay claim to a steadily increasing share of overall central government expenditure. Even with sizeable government financial assets, these resources will primarily be used to finance the increase in pension expenditure associated with the ageing of the population. Taxes cannot be increased unaccompanied by a weakening of the position of the business sector. Therefore, it would be inappropriate to base policy decisions on the assumption that growth in public expenditure items other than pensions can exceed GDP growth. Allow me to illustrate this.

The key features of emerging markets in Asia are the rapid changes in the financial landscape, the disintermediation and growth of capital markets, globalisation and the increased linkages between financial markets and economies via crossborder activities, the proliferation of complex financial instruments and the increasing convergence of supervisory framework and standards such as Basel II, IOSCO, the Insurance Core Principles of the International Association of Insurance Supervisors (IAIS), and international accounting standards. In this changing landscape, we see competition along with synergy between like-institutions as well as different kinds of institutions. In savings instruments and wealth management market, we see the rapid growth of interactions between commercial banks, investment banks, and insurance companies, domestic and overseas. Indeed, different types of financial institutions have different asset-liability structure, risk profile, and therefore together help enhance the completeness of the financial system. For instance, life insurance firms tend to have natural niche in the longer end of the market, and as such, offer opportunities for financing and providing hedging instruments for long-term investment, such as for infrastructure, which is a key driver of Asian economic growth. Many of the longer-term assets have become underlying assets upon which the market for financial engineering thrives-derivatives are used to engineer and structure complex products tailor-made for various market players with different risk-return preferences. While this process brings benefit, it also brings inherent risks that need to be properly managed, as the current turmoil clearly demonstrates.