internationally exposed industries would suffer a negative impact from high - level spending of petroleum revenues through a deterioration in competitiveness. hence, an important objective for the fund is to shield the economy from fluctuations in prices and extraction rates in the petroleum sector, which is one reason why the fund is not allowed to invest in norway. the fund serves as a buffer between current petroleum revenues and the spending of these revenues in the norwegian economy. it is important to note that the entire petroleum revenues, as well as the return on the fund, go into the government pension fund. then, an amount equal to the non - oil budget deficit is transferred into the fiscal budget. this mechanism ensures three objectives : first, the variability in petroleum revenues is isolated to the growth rate of the fund. second, any use of the fund is integrated into the ordinary budget routine and does not undermine the fiscal budget as a single instrument for assigning priority to different needs. and third, the amount of spending of petroleum revenues, that is the size of the non - oil budget deficit, can be aligned with the needs of fiscal policy as well as with the targeted intergenerational distribution. note that this setup for the fund can work with different fiscal rules or guidelines for how large the non - oil budget deficit should be. in norway, the storting ( norwegian parliament ) has approved a fiscal guideline that implies that the annual non - oil deficit should, on average over time, be limited to 4 per cent of the pension fund. this is equal to the long - term expected real return on the fund. such a guideline provides predictability in the level of spending. if the government disregards the guideline, enterprises will loose an important reference in gauging the expansiveness in fiscal policy. thus, three successive governments have been loyal to this guideline and it still enjoys a substantial majority backing in the norwegian parliament. adherence to this policy is also scrutinized closely by the public who have developed a sense of ownership of the fund. another important feature of the model is that there is consistency between the size of the fund and norway's net financial wealth. this is ensured by the act relating to the government pension fund where it is stated that the government cannot borrow as long as the balance of the fund is positive. the fund has become large and is still growing very rapidly. it is projected to reach 200 per cent of norway's gdp around the year 2010. the huge cash flow into the fund has

ben s bernanke : the federal reserve ’ s role in bank supervision testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on financial services, us house of representatives, washington dc, 17 march 2010. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system ’ s website. * * * chairman frank, ranking member bachus, and other members of the committee, i am pleased to have the opportunity to discuss the federal reserve ’ s role in bank supervision and the actions that we are taking to strengthen our supervisory oversight. the federal reserve ’ s role in supervision like many central banks around the world, the federal reserve cooperates with other agencies in regulating and supervising the banking system. 1 our specific responsibilities include the oversight of about 5, 000 bank holding companies, including the umbrella supervision of large, complex financial firms ; the supervision of about 850 banks nationwide that are both state - chartered and members of the federal reserve system ( state member banks ) ; and the oversight of foreign banking organizations operating in the united states. the federal reserve ’ s involvement in regulation and supervision confers two broad sets of benefits to the country. first, because of its wide range of expertise, the federal reserve is uniquely suited to supervise large, complex financial organizations and to address both safety and soundness risks and risks to the stability of the financial system as a whole. second, the federal reserve ’ s participation in the oversight of banks of all sizes significantly improves its ability to carry out its central banking functions, including making monetary policy, lending through the discount window, and fostering financial stability. 2 the financial crisis has made clear that all financial institutions that are so large and interconnected that their failure could threaten the stability of the financial system and the economy must be subject to strong consolidated supervision. promoting the safety and soundness of individual banking organizations requires the traditional skills of bank supervisors, such as expertise in examinations of risk - management practices ; the federal reserve has developed such expertise in its long experience supervising banks of all sizes, including community banks and regional banks. but the supervision of large, complex financial institutions and the analysis of potential risks to the financial system as a whole require not only traditional examination skills, but also a number of other forms of expertise, including macroeconomic analysis and forecasting ; insight into sectoral, regional, and global in the aftermath of the crisis, the view that the involvement