##e ” [ in memory of our ancestors ], samlede skrifter [ collected works ], vol. 2 : 1834 – 37. kolbjørn skaare ( 1995 ) : norges mynthistorie [ a numismatic history of norway ] ( p. 171 ), vol 1. oslo : universitetsforlaget. bis central bankers ’ speeches a new norges bank act was adopted in 1892. norges bank ’ s district branches lost their right to set the interest rate in their own district – norway became one interest rate kingdom. and the stock of gold would no longer set an absolute limit on the supply of banknotes. a formal obstacle to the bank ’ s provision of emergency liquidity to private banks in a crisis had been removed – and, as it turned out, the need for emergency liquidity would soon arise. a more complex banking system with a growing number of links to the international financial system had set the stage for financial turbulence. just before the turn of the century, a speculative economy had developed in christiania. property prices soared and newly established banks willingly provided loans – often based on short - term foreign credit. the ensuing crash was to claim many victims. one day in june 1899, a delegation from one of the banks, discontobanken, marched into norges bank with some very bad news : one of the country ’ s largest companies could not meet its payment obligations and discontobanken was on the verge of collapse. if the bank fell, panic could ensue, triggering a domino effect in the banking system. norges bank, under the leadership of governor bomhoff, took immediate action to provide liquidity support. credit was injected into the economy. norges bank soon had to take on the additional task of resolving speculative banks while at the same time protecting healthy banks from being caught in the undertow. norges bank was later praised for its approach. during the storting ’ s deliberations on norges bank ’ s activities, the following comment was made : “ … norges bank had offered immediate support at a moment when it was less important to be the bank ’ s director and more important to keep a cool head and a warm heart. ” norges bank ’ s heart beat for the monetary system. cold reason dictated that if the turbulence in the banking system was allowed to spread, the country ’ s economy would suffer a heavy blow. the year 1905 is regarded as a milestone

and surpluses do not necessarily reflect an imbalance, but can be a prudent adjustment. chart : exports from emerging economies in asia emerging economies in asia now account for 16 per cent of total global exports, compared with 9 per cent in 2000. with substantial labour reserves and a cost level that is considerably lower than other countries, it has been easy for emerging economies to find markets for manufactured goods. a chinese manufacturing worker ’ s hourly wage is about 1 / 20 of a us worker ’ s wage3. even though there are considerable gains related to international trade and free capital movement, there are also dangers to be avoided. over the past thirty years, a number of countries have been hit by financial crises. the asian crisis at the end of the 1990s showed that the combination of large trade deficits, small foreign exchange reserves and a fixed exchange rate regime proved to be demanding. when international investors lost confidence in the ability of governments to defend the fixed exchange rate, the countries encountered difficulties. sharp currency depreciations and major readjustments followed in many countries. even though economies in this region have fared well in recent years, the experience may have left its mark. a number of asian countries, china in particular, have chosen to keep their currencies pegged to the us dollar. as long as the chinese authorities are successful in keeping the exchange rate fairly fixed, competitiveness and a trade surplus will be maintained. however, us bureau of labor statistics. international labor comparisons. manufacturing in china. http : / / www. bls. gov / fls / china. htm bis central bankers ’ speeches such a policy is at the expense of deficit countries, which would have preferred to see an adjustment in the yuan exchange rate. china ’ s exchange rate policy is therefore under strong pressure, especially from the us. but china ’ s economic strategy is based on its own experience and the experience of others. first, china has chosen to focus on the export of finished manufactured goods rather than domestic consumption as the basis for growth. so far, this has resulted in dynamic developments where growth has been kept high owing to increasing opportunities for people in rural areas to move to new jobs in towns and cities. a stable exchange rate has contributed to predictable operating parameters for a rapidly growing export industry and has held up competitiveness. at the same time, the focus on manufacturing has made china a significant player in the world economy, able to attract international expertise for further development of the corporate sector