who receive material nonpublic information in the ordinary course of their normal business activities may need to better control access to that information. specifically, access to material nonpublic information needs to be walled off from personnel who conduct securities and derivatives trading. the potential for conflicts of interest between loan origination and credit derivatives trading activities has been recognized by the industry as well as regulators, and that is a commendable development. in october 2003, the joint market practices forum, a collaborative effort of the bond market association, the international association of credit portfolio managers, the international swaps and derivatives association, and the loan syndications and trading association, issued a statement of principles and recommendations regarding the handling of material nonpublic information by credit market participants. the statement articulates principles and recommendations regarding the handling and use of material nonpublic information by credit market participants that maintain loan portfolios or engage in other activities that generate credit exposures and, in that connection, enter into transactions in securities or security - based swaps, including certain credit derivatives. the statement of principles fulfills a number of objectives. the most critical, in my view, is the promotion of fair and competitive markets in which the inappropriate use of material nonpublic information is not tolerated. at the same time, the statement allows lenders to effectively manage credit portfolio activities to facilitate borrower access to more - liquid and more - efficient sources of credit. this effort recognizes that the liquidity and efficiency of our financial markets are related directly to the integrity of, and public confidence in, those markets. the joint statement describes two models of credit portfolio management : the “ private side ” model and the “ public side ” model. in reality, most banking organizations appear to have adopted a hybrid model that lies at some point along a continuum between pure private and pure public. in general, in a private - side model, credit derivatives traders may have access to material nonpublic information, but traders must pre - clear each transaction they execute. in a public - side model, traders are walled off from private - side information and personnel to prevent their access to material nonpublic information. accordingly, the circumstances in which a transaction is restricted because of the trader's possession of material nonpublic information is limited. the forum's statement of principles also provides several meaningful recommendations, some of which already have been adopted by the major participants in the credit derivatives markets. among other things, the recommendations

also be monitored. analysing the interaction between real variables and financial variables has been assigned high priority. in financial sector outlook we evaluate how an array of factors affect the robustness of the financial sector. the report includes an assessment of the outlook for the financial sector. if norges bank is of the view that the situation requires the use of instruments others than those available to norges bank, this should be clearly indicated. financial sector outlook is thus submitted to and discussed with the ministry of finance and the banking, insurance and securities commission. the report is made public and published in our quarterly report economic bulletin. the analysis of financial institutions concentrates on the situation in the banking sector and main groups of institutions as it is norges bank ’ s responsibility to ensure the stability of the system, and not individual institutions. from a macroeconomic perspective, however, it may be appropriate to monitor developments in the largest institutions as this could deepen our understanding of macroeconomic developments and the main trends in the financial sector. norges bank ’ s surveillance work is carried out in close cooperation with the banking, insurance and securities commission, which supervises individual institutions. the banking, insurance and securities commission also produces reports on a regular basis with assessments of the outlook for the financial industry. i would like to highlight three structural features that have contributed to changing the risk outlook for the norwegian financial system. first : there are now a larger number of financial groups, which comprise banks, insurance and mortgage companies, etc. the size of these entities has increased the risk of negative systemic effects if problems should occur in one of them. on the other hand, size increases the scope for spreading risk. second : the number of foreign financial institutions in norway has increased. they will normally operate in several markets and engage in a broader range of activities. they may thus be more resilient to a recession or a crisis situation in norway than banks whose activity is confined solely to norway. the risk of contagion to other institutions is thereby reduced. third : globalisation of financial markets means that events outside norway feed through to the norwegian economy faster and with greater force. payment system as mentioned, several measures have been introduced to strengthen the payment and settlement system. at the same time, the volume of payments has increased sharply. the risk of problems in the banking sector spreading through the payment system has not been eliminated. a high - priority task of norges bank is to identify risks and, together with the industry, contribute to more secure