to amend the act is now being circulated for comment. nou 1973 : 3 taxation of dwellings ( headed by tor sekse ) and nou 2003 : 9 tax commission ( headed by arne skauge ). the ifrs, or a simplified application of the ifrs, applies to banks belonging to a listed company. under the regulation, financial instruments are to be stated at fair value, in practice at market value. see act no. 56 of 17 july 1998 : act relating to annual accounts, etc., ( accounting act ), chapter 2. housings loans in their loan portfolios, basel ii entails a substantial reduction in capital requirements after a transitional period. this is because highly secured housing loans have a low risk profile. bank equity ratios have fallen in recent years. at the same time, tier 1 capital, which is a risk - weighted measure of financial strength, has been stable. this reflects a sharp increase in bank lending secured by mortgages on residential property in this period. the basel ii framework offers limited experience so far. it presupposes that risk assessments consider the prevailing macroeconomic environment. there is still a risk that banks give excessive weight to recent years ’ experiences in their assessments and models. the supervisory authorities can help remedy this by ensuring that banks ’ assessment of risk in internal models is based on data from at least on complete business cycle. the supervisory authorities also have the possibility of imposing an extra capital requirement on a bank if the bank has large risk exposures. banks must therefore perform stress tests to demonstrate that they have sufficient capital to weather a downturn. regulatory changes can probably reduce fluctuations in banks ’ eagerness to lend. banks could be required to accumulate additional reserves. one example is that in a favourable economic situation banks could be required to make additional provisions for future losses, as is the case in spain. 9 another proposal 10 is that the capital requirement should be raised when lending growth increases. banks may be forced to sell large volumes of assets in a crisis situation. three us academics 11 have recently proposed a supplement to the capital requirements in order to reduce this selling pressure. they propose that banks acquire a form of insurance that is paid out when the banking sector as a whole has losses over a certain level. when a crisis occurs, banks will then be assured of a supply of fresh capital. foreign - owned branches and subsidiaries have a market share in norway of close to 35 per cent in terms of total assets. most of them are chartered in

on interbank loans rose markedly. norwegian banks rely heavily on international markets for their funding. the rise in money market premiums in the us and europe therefore rapidly spread to norwegian interest rates, even though norwegian banks are profitable, enjoy confidence and have limited loss exposure. when banks would no longer lend to each other, many central banks provided liquidity with a longer maturity and lower collateral requirements than usual. norges bank has also, in periods, increased the volume of lending to norwegian banks. we have provided extra shortterm liquidity, for example through currency swaps. we have also offered banks loans with longer maturities than earlier. we have not changed the collateral requirements for loans. this is because we already accepted a broad range of collateral than those central banks. this is because – for reasons we appreciate – the norwegian government bond market is very thin. for a long time, nor did we have a well developed market for other bonds. at the same time, bank demand for loans from norges bank is considerable in some periods of the year. in this decade, we have been able to tighten the collateral requirements somewhat, most recently in 2005, when we among other things restricted access to using bank securities as collateral. at that time, we announced that we would later go a step further. this promise remains intact. central bank measures have curbed the fluctuations in interbank interest rates, but only for loans with short maturities. for longer maturities, premiums have continued to rise, and the premium on 12 - month money market rates is now more than one percentage point. the turbulence has particularly affected banks with low deposits and considerable money market loans. both roskilde bank, recently taken over by denmark's nationalbank, and northern rock, which had to be bailed out by the bank of england last year, had fairly low deposit - to - loan ratios. combined with large exposures in the property and construction sectors, this made them vulnerable. norwegian banks generally have higher deposit - to - loan ratios, although there are differences. banks and investors, both in norway and abroad, are now charging higher premiums and higher prices for providing capital for acquisitions, restructuring and investment, and highly leveraged enterprises must pay high risk premiums when they borrow. it has become more difficult to obtain funding. norges bank ’ s survey of bank lending indicates that banks are gradually tightening their lending standards. household debt growth has recently edged down. at the same time, consumption growth has