regulations on consumer protection for its supervised institutions. more specific guidance appear in the in the sales and marketing guidelines for financial products as well as the basic standards in the administration of trust, other fiduciary and investment management accounts. at the core of these standards is the expectation that financial institutions must know their clients and remain focused on what products and services your investors really need. i know that as members of the fmap, you continuously hold yourselves to a high standard. you already have the asset management code in place. i am also encouraged by your theme this year – anticipating investors ’ needs in a borderless world. this tells me that the industry is aware that in order to move forward, the customer ’ s need must always be met. he or she must feel safe to transact by any mode and he or she must be satisfied with the product or service availed of. in this, the bsp and the fmap ’ s objectives are aligned. conclusion to recap, the current state of the economy provides many opportunities. the continued growth and positive outlook on the philippines may mean that the financial industry will need to step up to meet the demands of future savers and investors. the potential to meet financial inclusion objectives are likewise spurred by the elimination of borders through regional integration and technological developments. meanwhile, gains can only be sustained through education and a conscious effort to protect the welfare of consumers. i am reminded of a quote from us president john f. kennedy : “ change is the law of life, and those who look only to the past or present are certain to miss the future. ” ladies and gentlemen, we are in the era where finance and provision of services to investors are transformed from the conventional approach into a “ borderless world. ” we can only ably embrace change if we prepare ourselves well. 5 / 6 bis central bankers'speeches thank you and good evening! 6 / 6 bis central bankers'speeches

, we cannot exclude the possibility that a shock that leads to a change in the equilibrium real exchange rate occurs. examples of such shocks are a large permanent shock to the oil price or a permanent increase in the government expenditure. if such shocks occur, norges bank must prevent monetary policy from contributing to higher inflation or a deflationary recession, since that would undermine the confidence in the krone. there are, however, some institutional responses that will take place if the bank is not able to return the exchange rate back to its initial range, as defined by the mandate, without contributing to inflation or a deflationary recession. i will come back to this issue later in my speech. the base drift problem if the inflation rate in norway deviates from the inflation rate in the euro countries, the nominal exchange rate will need to adjust over time. however, some of you may object that stabilising the norwegian inflation rate at the level aimed at by the euro countries may not be sufficient to stabilise the nominal exchange rate. the reason is that inflation in both norway and the euro countries will be subject to stochastic shocks. this means that even if the expected inflation rates in norway and the euro countries were the same, the actual inflation rates would deviate. technically speaking, the relative price levels will be subject to base drift, and so will the nominal exchange rate. professor larry ball has discussed this in a paper on norwegian monetary policy. keeping the relative price level constant would require that we target the price level and not the inflation rate. however, in the 1920s norway experienced that a policy aimed at achieving a specific level for the purchasing power of money led to substantial macroeconomic instability. aiming at a price level target may in some situations require a monetary policy that leads to a deflationary recession, which may be hard to turn due to the zero limit on nominal interest rates. in other situations it may require inflating the economy. a monetary policy leading to inflation or a deflationary recession will undermine confidence in the krone, thereby generating exchange rate instability. we also note that the present exchange rate range has more or less prevailed for more than 10 years, indicating that base drift may not represent a substantial problem in practical policymaking. how does norges bank operate? forecasts of inflation and general macroeconomic development play a large role in the conduct of norwegian monetary policy. projections are presented in the bank ’ s quarterly inflation reports. if the inflation forecast does not approach the level