The last paragraph specifies what Norges Bank is required to do. The first sentence in the mandate refers to the value of the krone. Stability in the internal value of the krone implies that inflation must be low and stable. Low and stable inflation fosters economic growth and stability in financial and property markets. The regulation also states that monetary policy shall be aimed at stability in the Norwegian krone’s external value, contributing to stable expectations concerning exchange rate developments. With open trade with other countries and free capital movements, we do not have the instruments to fine-tune the krone exchange rate. The krone has appreciated when economic activity has been high and there have been expectations of a wide interest rate differential between Norway and other countries. The krone has depreciated when activity has declined and the interest rate differential has narrowed. There is also a strong tendency for the krone to revert to a level that stabilises the price level in Norway relative to our trading partners, measured in a common currency.1 The task of monetary policy is to provide a nominal anchor. The inflation target is such an anchor. The conduct of monetary policy Norges Bank’s operational conduct of monetary policy shall be oriented towards low and stable inflation. Norges Bank operates a flexible inflation targeting regime, so that weight is given to variability in inflation as well as variability in output and employment. Inflation shall be 2½ per cent over time.

The financial accounting rules for balance sheet netting for repo transactions are spelled out in Financial Accounting Standards Board (FASB) Interpretation No. 41, “ Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements” (FIN 41). For other derivatives contracts, FASB Interpretation No. 39, “Offsetting of Amounts Related to Certain Contracts” (FIN 39) states the relevant requirements. 23 I discussed the foreign repo pool in my 2016 remarks. See Potter, “Money Markets after Liftoff: Assessment to  Date and the Road Ahead,” February 22, 2016. It is also discussed in the annual report. 24 See “The Recent Increase in the Effective Fed Funds and Overnight Bank Funding Rates,” Wrightson ICAP,  October 17, 2016. 25 See “Factors Affecting Reserve Balances,” March 10, 2016 and January 5, 2017. 26 Duffie and Krishnamurthy, “Passthrough Efficiency in the Fed’s New Monetary Policy Setting,” 2016. 27 In constructing this time series, Darrell and Arvind combine two things: before mid-2009, they use a now-  discontinued secondary market rate for tradable certificates of deposit. This is a wholesale market rate, and during normal times it generally tracked the federal funds rate. However, after mid-2009, they use a primary market deposit rate (i.e., rates offered in bank branches to customers) that did not rise after the December 2015 tightening. This low responsiveness of primary market rates to tightening of monetary policy is consistent with similar behavior during previous tightening cycles, as documented by Driscoll and Judson, “Sticky Deposit Rates,” October 1, 2013. The OECD’s dataset includes a 90-day interest rate series.