or if the krone appreciates markedly, inflation may be lower than projected. the uncertainty surrounding the interest rate ahead is illustrated by the shaded areas in the chart. the government pension fund – global now, let me turn from the financial turmoil and economic developments in norway to the government pension fund – global and the issue of sovereign wealth funds. over the past year, we have seen a growing international debate about government - owned investment vehicles ; so - called sovereign wealth funds ( swfs ). the increased attention reflects their rapid growth over the last decade. the debate has revealed some scepticism towards these funds, where key concerns relate to a lack of transparency and possible nonfinancial investment objectives. in my view, the debate should also reflect these funds ’ potential to positively influence international financial markets through enhancing market liquidity and financial resource allocation. typical features of this type of funds are long investment horizons, no leverage and no demands for the imminent withdrawal of funds, unlike the growing number of leveraged hedge funds with short time horizons. hence, sovereign wealth funds have a high risk - bearing capacity and are resilient to short - term volatility. they may therefore act as a stabilising factor in financial markets by dampening asset price volatility and liquidity risk premiums. let me elaborate and exemplify this by looking at the government pension fund – global : the pension fund is a policy tool to support long - term management of norway ’ s petroleum wealth and avoid the resource curse. an important objective is to shield the norwegian economy from fluctuations in prices and extraction rates in the petroleum sector. the fund is only invested abroad in financial markets. the alternative to an oil fund would have been to regulate the extraction path by putting a conservative upper limit on annual extraction. by setting up the pension fund, we have separated the extraction of oil and gas from the actual spending of the petroleum revenues. this has probably resulted in higher production of oil and gas over the past two decades. the pension fund was formally established in 1990, but it was not until 1996 that the first allocation – nok 2 billion – was made to the fund. since then, it has grown to around nok 2 trillion ( well above usd 350 billion ). the fund is fully integrated with the government budget, and the same priorities are imposed on spending from the fund as on any other government spending. this means that the entire petroleum revenues, as well as the return, go into the fund. then

ben s bernanke : community banking speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the future of community banking conference, sponsored by the federal deposit insurance corporation, arlington, virginia, 16 february 2012. * * * it is a pleasure to speak at the federal deposit insurance corporation ’ s ( fdic ) conference on the future of community banking. this conference is indeed an important and timely one. community banks make a critical contribution to the prosperity of both their localities and the nation as a whole, which is why we at the federal reserve and the other banking agencies are acutely interested in their long - term strength and viability. 1 today i will discuss the role community banking organizations play in supporting the health of our economy, as well as some of the challenges they face. because we greatly value our ongoing dialogue with community banks, i will also speak about the federal reserve ’ s efforts to improve our understanding of the pressures affecting community banks and to foster constructive supervisory relationships. the role of community banks in a challenging economy although community banks provide a wide range of services for their customers, their primary activities revolve around the traditional banking model – specifically, taking shortterm deposits to fund longer - term investments, such as small business, agricultural, or commercial real estate loans. accordingly, risks at community banks tend to arise from their lending, in the form of credit risk, interest rate risk, or concentration risk, rather than from the trading, market - making, and investment banking activities associated with the largest banks. however, by taking on and managing the risks of local lending, which larger banks may be unwilling or unable to do, community banks help keep their local economies vibrant and growing. importantly, community banks are well positioned to go beyond the standardized credit models used by larger banks and consider a range of factors when making credit decisions. in particular, they often respond with greater agility to lending requests than their national competitors because of their detailed knowledge of the needs of their customers and their close ties to the communities they serve. while community banks have certain natural advantages, they also face an array of challenges, stemming from both the current economy and, to some extent, from their business model. the close ties of community banks to local economies is a source of strength, as i mentioned, but those close linkages have drawbacks as well, most notably the resulting concentration of exposures to those same local economies. strong community banks take measures