The support for a market economy lost ground after the recessions and financial instability in the interwar period. Economic policy was marked by coordination, control and regulation. At the same time, Norway took part in international organisations. International organisations made an effort to promote economic cooperation and increased integration of international trade and fixed investment. Trade barriers were gradually scaled back and trade picked up already in the 1950s. Capital movements remained strongly regulated, however. Maintenance of a high level of fixed capital formation in inter alia infrastructure and private and public industrial companies was an important part of economic policy after the war. The fixed investment-toGDP ratio stayed at a historically high level until the late 1970s. On the other hand, low or negative real interest rates, combined with credit regulation, contributed to a low return to capital and an inefficient use of resources. Since the late 1970s, the investment ratio has declined in Norway as in many other European countries. India, on the other hand, is in the process of catching up. High investment growth in infrastructure as well as in businesses is probably important to maintain high economic growth in India. The government sector in Norway increased in importance until the beginning of the 1990s. Taxes were raised to support increased use of resources in the public service sector and to support a rising level of transfers between households and industries. The regulatory economic policy in the post-war period was, however, not sustainable.

Amendments to the trading book are due to be implemented no later than the end of 2011 to address the problem of excessively low capital charges for trading activities in the pre-crisis period. In the EU, the appropriate measures are included in amendments to the Capital Requirements Directive, the so-called CRD3 package. The FSB just finished its peer review on how its members implemented the agreed principles for sound compensation practices. In the EU, the CRD3 has specifically included banks’ remuneration policies in the supervisory review. An EU regulation on credit rating agencies – which will come into effect at the end of 2010 – was adopted last year. The European Commission has recently proposed amendments to the regulation which aim to introduce a centralised framework for supervision of the agencies at the EU level. Under the new supervisory framework, an European Securities and Markets Authority with oversight and supervisory powers over credit rating agencies will be established. Efforts in this field aim to address some shortcomings of the credit rating sector revealed by the crisis, such as conflicts of interest, poor rating quality and insufficient transparency about the methods used for their evaluations and the procedures for rating decisions. A legislative proposal that establishes regulatory and supervisory standards for hedge funds is also under consideration in the EU. Finally the two major accounting standard setters, IASB and FASB, are continuing their efforts to achieve convergence of accounting standards, though it might not be possible to keep to the initially agreed time table.