economy in the subsequent five years will have to accept a new normal growth of around 7 %, after expanding at an average 10. 25 % in the last two decades. similar pattern is expected to occur in other emerging markets ’ economic path. table 3 the shift in global economic landscape 24. what becomes a concern for us is the risk that the shift in the global landscape will reverse the direction of portfolio flows to advanced countries, particularly the us [ graph 10 ]. undeniably, the delay in the reduction of us monetary policy stimulus has provided “ temporary breathing space ” for us at this moment. nonetheless, the tapering off of the us monetary stimulus is indeed an unquestionable event that will occur in the near future. as a matter of fact, several recent indicators have started to reflect a strengthening of the us economy. 25. against the background of the above global challenges, equally daunting challenges arise in the domestic front [ figure 1 ]. the first challenge relates to our financial market that needs to be restructured. one of the issues pertains to the fragmentation of rupiah excess liquidity in the banking sector. this calls for attention as it would increase the complexities of monetary operation and disturb the stability of the financial system. bis central bankers ’ speeches graph 10 global capital flows figure 1 structural challenges to monetary policy implementation 26. another challenge concerning the financial market is its lack of depth and liquidity. in the rupiah market, this is reflected in the low turnover and the anomaly of price formation in the repo market [ graph 11 ]. the collateralized market does not appeal to many market participants and is more expensive compared to the uncollateralized interbank money market. in the meantime, the foreign exchange market is characterized by low volume and inactive hedging transactions. with such micro structure, the exchange rate is easily under pressure even when the demand for foreign exchange experiences a small upsurge. bis central bankers ’ speeches graph 11 domestic money market condition 27. the second challenge deals with structural weaknesses that will inhibit our attempt to boost the economy to a higher level. today, indonesia has firmed up its position as a middle income country and is in transformation from lower middle income to upper middle income [ graph 12 ]. this implies that the middle class expansion in the last decade will continue and correspondingly our domestic market will enlarge. the structure of demand for goods and services will also be getting more diverse with increasingly complex characteristics [

øystein olsen : economic perspectives speech by mr øystein olsen, governor of the norges bank ( central bank of norway ), to invited foreign embassy representatives, norges bank, oslo, 3 april 2014. * * * the speech is based on the annual address 2014, monetary policy report 1 / 14 and previous speeches. please note that the text below may differ slightly from the actual presentation. accompanying charts can be found at the end of the speech and on the norges bank website. excellencies, ladies and gentlemen, first of all, i would like to welcome you once again to norges bank. this year is the bicentenary of the signing of the constitution of norway. two hundred years ago, norway was a poor country on the periphery of a europe that was then the world ’ s economic centre of gravity. for the 112 sworn representatives, popularly known as the men of eidsvoll, who took their places as the constituent assembly in spring 1814, the atmosphere was full of hope for freedom and a better future. several of them had spent time abroad and had been influenced by philosophers and by the american and french revolutions. the norwegian constitution was inspired by the ideas they brought home. absolute monarchy under the danish king was to be replaced by the sovereignty of the people and the separation of powers. institutions with clearly distinguished roles would prevent the arbitrary use of power and foster confidence. in the discussion at eidsvoll, christian magnus falsen, a key member of the constituent assembly, said that no state can exist without a well - functioning monetary system. another prominent member of the assembly, count wedel jarlsberg, insisted that the nation must have its own bank. the people ’ s elected representatives took responsibility for the monetary system, as stated in article 75 of the constitution : « it devolves upon the storting to supervise the monetary affairs of the realm ». the storting delegated the task of supervising the monetary system to norges bank, which was established in 1816. the king would no longer have the authority to print money at his own will. at its inception, norges bank ’ s head office was located in trondheim, a twelve - day journey from the government in christiania, and even farther from stockholm, giving the central bank a geographical – and not just formal – distance from the government authorities. much has happened since 1814. norway no longer lags behind other western economies. inflation is low and stable. we have