the ministry of finance. the financial crisis also demonstrated the need for macroprudential policies. but who will have responsibility for these policies? the framework for macroprudential policies is likely to differ from one country to another. the governor touched on these questions in yesterday ’ s speech. to sum up : perhaps my question was not so naive after all. the examples above show that there is not an obvious answer to “ what defines a central bank ”. nevertheless, some key principles may apply, both historically and across national borders : as early as 1873 walter bagehot 1 formulated the well known general principles for the role of central banks. he said : “ to avert panic, central banks should lend early and freely ( without limit ), to solvent firms, against good collateral, and at “ high rates ” the events in 2008 showed us that the lender of last resort function continues to be of the utmost relevance and importance. the financial crisis also illustrated that central banks have an important role in creating and providing liquidity. in addition, the establishment of norges bank in 1816 and the bank ’ s intervention in the money markets in 2008 show that central banks also have an important role as “ market maker of last resort ”. searching for answers even if we can provide some general answers to the question of what has characterised central banking activities, we must continue to search for answers to what central banks are and what makes them useful. norges bank will celebrate its two hundred year anniversary in 2016. we plan to write three books : the history of norges bank will be written by historians, and the monetary history of norway will be written by economists. the third book from the project will offer an international, historical perspective on central banking, and has been given the working title what is a useful central bank? norway will only be mentioned in this book if our experiences contribute to the international understanding of the question at hand. this last question was also the topic of the governor ’ s speech yesterday and the theme of today ’ s symposium. he pointed out that a useful central bank must have a clear mandate with relevant objectives and instruments. the central bank must also seek to reach these objectives in a manner that ensures confidence. arranging this symposium on a theme that interests the governor is our way of honouring him after having served his two periods. today we begin with a historical perspective on central banking. professor bordo will offer some long - term perspectives, while professor toniolo will discuss some experiences from central

with? what instruments does it trade? with this as our starting point, i shall take you on a brief journey back in time. what is a central bank? after the napoleonic wars, norway gained its independence following a five - hundred - year union with denmark. the country got its own constitution on 17 may 1814. according to the constitution, the norwegian parliament was “ to supervise the monetary affairs ”. when the major powers used force to implement the provision of the treaty of kiel uniting norway with sweden, the constitution needed to be adapted to the new realpolitik. however, the parliament managed to insert a new article in the november version of the constitution. it established an independent central bank, ensuring that norway would have its own independent monetary system. the actual norges bank act was not established until 1816. the first deposits were recorded in the books in 1817. at the time there were no functioning banks in norway. however, there was manufacturing, consumption, barter, investment and trade. there was also a rudimentary credit market and monetary system. commercial credit was available, savers met investors and bills of exchange were discounted. but these markets were rather inefficient : their margins were high, the supply of credit meagre and uncertainty high. most activities associated nowadays with a monetary system took place in the “ unregulated markets, ” to use the current term. accounts were kept, but not always in the numeraire we think of today. for example, this is described in the local history of karlsøy and helgøy, up in northern norway, where at that time accounts were sometimes kept in commodities such as cod liver oil, saithe or flour. however, one of these unregulated markets functioned even more poorly than the others, namely the long - term credit market. for that reason, norges bank ’ s initial activity was to enter this market. norges bank provided loans secured by real property. at its birth, the bank was, to use current terminology again, “ market maker of last resort ”. a private banking system gradually took shape. the first savings bank was founded in 1822 and the first commercial bank in 1848. in 1852 the first state mortgage bank was established. these developments allowed norges bank to withdraw from the mortgage market and concentrate instead on providing liquidity to the short - term money market. however, it was not until the 1860s that the bank ’ s predominant task was supplying short