: norex sg 240802 correlation with world index. usd based price indexes 0, 8 dec 93 - 97 0, 6 1998 - 2002 0, 4 0, 2 denmark finland norway sweden source : ecowin / financial times sg 240802 fdi to / from the us. total at end 2001. per cent of gdp to us from us sweden denmark finland norway source : national central banks, imf sg 240802 the links with the us economy are many and complex. the us is one of our major trading partners. but the ties are perhaps even more evident in the capital markets. all the nordic countries have relatively large direct investments in the us economy. in addition, us capital markets today have a decisive impact on developments around the globe. american capital has also been important for investments in the nordic economies. us direct investments in norway. end of year 2000. m ining and extraction incl. oil and gas m anufacturing retail trade, hotels and restaurants f inancial ente rprises, real estate and business activities other 7 % 1 % 13 % 12 % 67 % source : norges bank sg 240802 us companies have been pioneers in developing the norwegian petroleum sector, which is crucial for us. last year, norway was the world ’ s third largest exporter of oil. even today, two thirds of us direct investments in norway are linked to our petroleum sector. the government petroleum fund market value in billions of usd1 ). end of june 2002 stocks bonds europe us asia and oceania america ex us 1 ) bond figure for us incl. usd 3 bn dollar - denominated issued by non - us entities source : national central banks, imf sg 240802 total capital in the government petroleum fund. end of year. per cent of gdp 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 source : ministry of finance. national budget 2003 sg 240802 revenues from the petroleum sector have generated an annual fiscal surplus of some 10 - 15 per cent over the last few years. since 1995, the fiscal surplus has been invested in the government petroleum fund. the fund invests only in foreign markets. investments – all portfolio investments - are spread between equities and fixed income instruments, as well as across countries. approximately 29 per cent of the fund is invested directly in the us stock market and in dollar - denominated bonds. the size of the fund has increased rapidly over the last few

import. commodities account for a substantial share of norwegian exports. commodity prices are subject to wide variations. experience shows that a deterioration in the terms of trade results in a depreciation, whereas an improvement leads to an appreciation. the exchange rate thus acts as a stabiliser, a buffer that partly curbs the effects of changes in the terms of trade on economic activity. developments in the krone exchange rate can also contribute to restraining the effects on prices of higher wage growth and other domestic cost disturbances when there is confidence that inflation will be stable over time. oil and gas are the commodities that account for the largest share of norwegian exports. a substantial portion of the revenues from the sale of oil and gas is invested in foreign equities and bonds through the government petroleum fund. the fund has thus diminished the impact of short - term fluctuations in oil prices on the domestic use of petroleum revenues. in the last 20 years, fluctuations in the terms of trade have been three to four times greater for the norwegian economy including the petroleum sector than for the mainland economy. the petroleum fund thus relieves pressure on the krone exchange rate. the relatively low level of uncertainty that market participants seem to attach to krone exchange rate developments may be a reflection of this. introduction of euro banknotes and coins the introduction of euro banknotes and coins from 1 january 2002 has no direct consequence for norwegian monetary policy. for households and businesses in the euro area, the new currency will become a physical reality, not just an accounting currency. the practical advantages of the common currency will become more apparent. the euro may be used in twelve countries. the costs connected with currency exchange between the twelve countries disappear. when the national currencies are withdrawn, price differences between the euro area countries will become more apparent. the result may be increased competition and lower interest rates over time. euro area citizens will develop a more positive attitude to the euro as their money. they will experience that the euro is stable, as it will be reflected in a stable level of retail prices. the changeover period, from the introduction of euro banknotes and coins until the national currencies cease to have legal tender status, is short. norwegian enterprises and households will also have to exchange their cash in euro area countries ’ national currencies. there seems to be a perception that exchange between two foreign currencies in norwegian banks must be made via norwegian krone, so that two exchange transactions are actually made, with fees being charged twice. i