. two out of the three members believed that inflation and economic pressures were as expected. a premise - based decision would thus leave the key rate unchanged. many will favour the premise - based approach because it gives weight to the underlying basis for the decisions we make. 30 research has also shown that it is better to discuss and vote on the grounds for any disagreements than to go directly to the conclusion. 31 at norges bank we base our procedures on a premise - based decision - making process. economists working at norges bank have an important role in decision - making, particularly because decisions are premise - based. 32 the bank ’ s economists thus constitute a stabilising element in the decision - making process that is robust to changes in central bank management and the executive board ’ s external members. for the bank ’ s economists to perform this role properly, it is essential that they are of a very high professional calibre. here the executive board also performs a vital role, providing constant feedback on the quality of the research supporting policy decisions. the board also discusses the bank ’ s personnel policy and measures to maintain and develop the skills of staff economists. but norges bank has a monopoly on setting the key interest rate in norway. one of the dangers of monopolies is a tendency towards complacency, which is why it is imperative to be in the critical spotlight. this keeps us, board and staff economists alike, constantly on our toes and helps us to develop as professionals. this, in turn, results in better decisions. every year we must stand to account for the way in which we carry out our mandate. there is reporting to the government and hearings in the storting. in addition, the ministry of finance commissions an independent review of monetary policy though what is known as “ norges bank watch ”. 33 at the same time we are open about what we do and why. there are external evaluations of work routines and professional standards. 34 there are no comparable institutions in norway – there is only one central bank. the benchmark must be international best practice. the evaluations are generally performed by international central banking experts or economists at other central banks. see for example bruce chapman ( 2003 ) : “ rational choice and categorical reason ”, university of pennsylvania law review 151 ( 3 ), 1169 – 1210 and philip pettit ( 2001 ) : “ deliberative democracy and the discursive dilemma ”, philosophical issues ( supplement to nous ) 11

sometimes, the nature of the uncertainty allows one to draw inferences regarding the probabilities of different outcomes. it is possible, in other words, to judge the risks one is facing, at least to a certain degree. in that case, decisions can be made on the basis of a calculated risk, which is an approach underlying theories of equity investment, 8 for example. but the financial crisis reminded us that keeping the overall risk picture in view may be difficult. when queen elizabeth visited the london school of economics in autumn 2008 she asked why no one had foreseen the crisis. the british academy forum replied to the queen in a letter six months later. included in the letter was the following : the euro area operates under rules intended in principle to facilitate long - term policy choices. the maastricht criteria require participating states to keep fiscal deficits and public debt within defined limits. recent history has shown that this framework must be reinforced through sanctions. decision - makers need an incentive to comply with the rules in practice. see finn e. kydland and edward c. prescott ( 1977 ) : “ rules rather than discretion : the inconsistency of optimal plans ”, journal of political economy, 85, no. 3, pp. 473 – 491. see arne kloster and kristin solberg - johansen ( 2006 ) : “ forecasting in norges bank ”, economic bulletin, 3 / 2006, jarle bergo “ interest rate projections in theory and practice ” ( speech at the foreign exchange seminar of norwegian economists on 26 january 2007 ) and svein gjedrem “ inflation targeting – some theory with main focus on practice ” ( speech at the centre of monetary economics / norwegian school of management on 8 june 2004. in alan greenspan ’ s opening remarks to the jackson hole symposium in 2003, available at : http : / / www. bis. org / review / r030905a. pdf. see for example william f. sharpe ( 1964 ) : “ capital asset prices : a theory of market equilibrium under conditions of risk ”, journal of finance, vol. xix, no. 3 and harry m. markowitz ( 1952 ) : “ portfolio selection ”, journal of finance, vol. xii, no. 1. “ one of our major banks, now mainly in public ownership, reputedly had 4000 risk managers. but the difficulty was seeing the risk to the system as a whole rather than to any specific financial instrument