, and the krone weakened considerably. when speculators withdrew, daily fluctuations increased and hedging against exchange rate volatility became more expensive. on christmas eve, the krone fell to its lowest level in ten years. we are now in the deepest downturn in oecd countries in the postwar period. the us economy may already have shrunk by around 2½ per cent since the crisis erupted in september. output has fallen at the same rate in many european countries, and perhaps by twice that rate in japan and korea. for a long period there were hopes that growth in china and other emerging market economies would hold up. but they are also now severely affected by the crisis. output is also contracting in norway, but so far probably somewhat less so than abroad. what is happening now is more than a normal fluctuation in the business cycle. the world is facing a crisis of confidence, with faltering faith in the future and a loss of confidence in banks, counterparties and contractual partners. the authorities have taken extraordinary action, as in a state of emergency, deploying a wide range of established and new policy instruments. five different sets of measures have been implemented : first, central banks have supplied liquidity to banks on a much larger scale than usual and providing loans with longer maturities. central banks are also providing foreign currency loans to their banks. second, key rates have been aggressively cut. the us entered the downturn first and had already reduced the key rate in early autumn 2007. and as the crisis developed, the federal reserve continued to lower its key rate. here in europe, key rates rose up to summer 2008 before being lowered substantially from october. third, credit policy instruments have been introduced. several countries are guaranteeing loans to banks. the federal reserve is buying mortgage - backed securities, asset - backed securities collateralised by student loans, credit card loans and loans to small businesses, as well as commercial paper issued directly by large businesses, a measure the central banks in japan and the uk also intend to implement. the uk government has announced that they will guarantee loans to small and medium - sized firms. fourth, the authorities in a number of countries felt compelled to supply risk capital to banks. some governments have assumed ownership of financial institutions. in the uk, the government is now a majority stakeholder in the royal bank of scotland and owns over 40 per cent of lloyds. in germany, the government is increasing its stake in commerzbank

will result in higher required returns in the future. under the fund ’ s strategy, more equities will be bought when equity prices fall and fewer when they rise. the fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. of the equities now owned by the fund, 40 per cent were purchased last year when prices were moving down. knut hamsun ( 1976 ) : august. in samlede verker 11, gyldendal norsk forlag, p. 120. ( unofficial translation by norges bank ’ s translators ). as a result, ownership in the business sector in the us, europe and asia has increased – in companies ’ human capital, in their machinery and equipment, brands and organisation. in the long run, and even though many companies have now folded, it may perhaps be at least as safe as extending loans. conclusion let me conclude. at the moment, activity is falling in the norwegian economy, as elsewhere. the source of the downturn is external. we cannot shield ourselves from its impact, but we can decide how we will address the turnaround. the global financial highway is now being modernised and overhauled. it is essential that traffic again flows smoothly. rimbereid asks : “ in which landscape will we lay our next lucrative track? ” 10 norway has a credible and robust economic policy, and a business sector that is quick to adapt. this is a good point of departure. thank you for your attention. øyvind rimbereid, 2008 : herbarium, p. 54. ( unofficial translation by norges bank ’ s translators ).