mainland economy. the petroleum fund thus relieves pressure on the krone exchange rate. changes in the krone exchange rate may also be due to interest rate changes. higher interest rates normally make it more attractive to buy nok - denominated assets and reduce nok - denominated debt, leading to an appreciation of the krone. in contrast, a decrease in interest rates will normally result in lower demand for the krone and a weaker exchange rate. experience shows that the interest rate only has this predictable effect on the krone exchange rate when it contributes to stabilising inflation. the exchange rate constitutes an important channel through which monetary policy operates. changes in the exchange rate are both desirable and intended when they contribute to stabilising inflation. however, fluctuations in the exchange rate can also be a source of economic disturbances. sentiments in the foreign exchange market may induce market participants to be excessively positive to a currency for a time while at other times they are overly negative. this may lead to unnecessary and wide swings in the exchange rate, which may spill over into other parts of the economy. low and stable inflation will also strengthen expectations of stability in the krone exchange rate over time. however, we must be prepared for fluctuations in the krone. norges bank's reaction to a change in the exchange rate will depend on its assessment of the effect on inflation. the reasons for the change must be assessed, as well as how long the change is expected to persist. evidence suggests that short - term fluctuations in the krone exchange rate have little impact on inflation. when the changes are potentially more permanent and thus may be assumed to have a greater impact on inflation, the bank will set the interest rate with a view to stabilising inflation. however, it is difficult to establish whether exchange rate fluctuations are permanent or temporary. as a rule, norges bank will thus be cautious about responding with interest rate changes to movements in the exchange rate. a special situation arises if strong turbulence in the foreign exchange market indicates that confidence in monetary policy is in jeopardy. it may then be appropriate with a marked change in the key rate. in addition to the interest rate, exchange market interventions are a possible monetary policy instrument. however, our experience has been that heavy and sustained interventions have little influence on the exchange rate, and hence inflation. exchange interventions, whether they involve selling or buying currency, are not an appropriate means of influencing the exchange rate over time. if norges bank intervenes heavily

for clearing payment transactions in nok, otherwise we will lose the advantages we have today. an efficient and secure common infrastructure must still be a main feature of the norwegian payment system, whichever solution the industry ultimately chooses. looking further ahead, a number of broad issues need to be addressed. norges bank will initiate a project to assess the payment and settlement system of tomorrow as a whole. the aim is to make active and constructive contributions to an efficient and secure payment system, today and in the future. we will seek long - term solutions to several of the issues mentioned above, in particular the following two key questions : should we continue to have a completely domestic payment infrastructure in norway, or could it become more international? how would we then solve issues related to national security? how should the infrastructure be changed to facilitate the services needed by end - users in the future? should payments still be cleared before they reach the central bank, or is gross settlement the best option? the first phase of the project is scheduled to be completed by the end of 2019. cyber security as the payment system is centralised and ict - dependent, it is vulnerable to cyber attacks. if an attack were to succeed, payments could come to a halt and financial losses could occur. an attack could also result in unauthorised access to or manipulation of sensitive information. the system ’ s vulnerability can be reduced in a number of ways, for example through wellestablished cooperation within the financial industry and between the industry and the authorities, sound security procedures and recovery capabilities. system owners are responsible for the resilience of their own systems. norges bank monitors the systems under its supervision to ensure that satisfactory defence mechanisms are in place. a number of payment system participants have outsourced the operation of their systems to a few ict service providers. this is a source of concentration risk. the failure of key service providers could bring important parts of the payment system to a halt. the problems at evry on 6 october 2017 affected approximately 40 banks in norway, as well as norway post and telenor. this incident illustrates the potential broad repercussions of the failure of a key ict service provider. such concentration risk is difficult for individual system owners to address alone. the entire infrastructure served by the provider is exposed to risk, not merely the individual system. ict service providers are not subject to the same regulation and supervision as licensed banking and payment system participants. it is norges bank ’ s view that the authorities should explore how 3