and continued high oil prices. different developments in global growth and in oil prices would result in a different path for the norwegian economy. interest rate setting must also be assessed in the light of developments in property prices and credit. wide fluctuations in these variables may constitute a source of instability in demand and output in the somewhat longer run. safeguarding financial stability implies that the interest rate should be brought up towards a more normal level. if developments in the economy are in line with the baseline scenario, it is likely that financial developments in banks and enterprises will be favourable. as mentioned above, however, developments ahead are uncertain and the norwegian economy may be exposed to shocks. uncertainty with regard to financial stability in the longer term is mainly related to the historically high household debt burden and to changes in asset prices. long periods of a sharp rise in debt, asset prices and investments may give rise to instability and problems in the financial system at a later stage. we have observed this phenomenon both in norway and in other countries. the trend we have seen in household borrowing in recent years is not sustainable over time. the current interest rate level is very low compared with the level that over time must be considered more normal. borrowers and lenders would probably be wise to bear this in mind. thank you for your attention.

savings are invested. future benefits depend on the return. it can be agreed that the pension payments are to be fixed. the size of payments will then depend on how much has been saved, the pension period and calculated return. under a defined - benefit pension programme, life insurance companies and pension funds – or those behind them – in a sense offer insurance against a form of absolute risk to which everyone is exposed. absolute risk may, for example, be a change in economic developments as a result of major disturbances to the world economy or the domestic economy. under a defined - contribution pension scheme, the individual member assumes the absolute risk. with a larger share of pension savings in defined - contribution schemes, some of the risk that is now being borne by insurance companies will be transferred to members. one problem that may arise in connection with defined - contribution schemes is that members end up with benefit payments that are markedly lower than expected. therefore, it would also be appropriate to apply risk limits to definedcontribution pension schemes. conclusion the local government sector employs a rising share of workers in our country, accounting for close to 25 per cent of employment today. the behaviour of local government, as a user of labour and employer, is of considerable importance for economic developments and also for the inflation outlook. the local government sector is a major user of financial service, both as borrower and as buyer of insurance products. norway has a well - developed financial system, but its bond market is small compared with other countries. in the long run, a larger and more liquid bond market in norway could provide a basis for improved risk management and enhanced diversification of risk in the financial system. a new pension system is now being considered. one of the main questions relates to the distribution between pay - as - you - go and fund - based schemes. there will always be a measure of uncertainty associated with future economic developments, and thereby with future pensions. the funding of pensions will continuously reflect this uncertainty. not even public pay - as - you - go schemes can guard us against this. a higher proportion of fund - based schemes will make this uncertainty more visible and provide greater opportunities for each individual to adapt. thank you for your attention.