probably have depreciated by more than it actually did, demand would have grown faster and inflation moved much higher. this would have had serious consequences for indebted households and businesses, as well as causing turmoil in the labour market and, ultimately, even more instability in the economy. other central banks have periodically needed a very tight monetary stance to bring inflation under control. for example after 1980, roughly a quarter of a century ago, the us federal funds rate was significantly higher for a while than iceland ’ s current policy rate. this proved necessary in order to rein in inflation that was also higher then than in iceland today. this policy was successful and the us has not faced a serious challenge from inflation since. ideas for an economic panacea have also been aired, typically involving the adoption of the euro. the central bank has already stated its view that adopting the euro would be imprudent except by joining the eu. even though iceland were to decide to apply for eu membership, it would not be able to enter into the monetary union until several years later, after fulfilling all the accompanying conditions which include criteria for inflation, interest rates and exchange rate stability. experience shows that no concessions are made from these conditions. it is also important to remember that membership of a larger currency area does not eliminate the need for sensible economic policy. what changes is that monetary policy independence is lost. decisions on consumer prices and unit labour costs relative to abroad would be transferred to the respective markets. this would make fiscal and wage flexibility even more vital in order to tackle cyclical fluctuations. in the current adjustment of the economy, the exchange rate of the krona has played a key role. without a flexible exchange rate, the crucial instruments for tackling prevailing economic conditions would have been tight fiscal restraint, cuts in public spending and / or higher taxes, to help ensure that sharp rises in wages and prices did not excessively weaken the competitive position of iceland ’ s trading sectors. exchange rate volatility in the recent term was fuelled by the overheating of the economy, which is now cooling once more. the crucial factor for near - term exchange rate developments is to restore economic stability in iceland with inflation on target, and to secure it in the longer run with prudent economic policies. it is doubtful whether claims that economic policy would necessarily become more prudent, if iceland switched to the currency of a larger currency area, are justifiable.

brought into full play in the building of a credit information system. credit information system building is a system engineering involving many aspects, and credit extension institutions play a key role in building the system. at present, priorities should be placed in the following aspects. first, great importance should be attached to the quality of data and related working mechanism should be improved as soon as possible. relevant institutions should, according to the pbc decree no 3 ( 2005 ), strictly follow the criteria of individual credit information database issued by the pbc and report credit information to the database in a accurate, complete and timely manner to ensure the quality of data in the database, which is key to the success of credit information system building. enterprise and individual credit information databases serve as a platform for banking institutions to share information. as our foreign colleagues often say “ rubbish in, rubbish out ”, you get what have inputted in the database. we hope that the heads of financial institutions and other credit extension institutions highly value this issue, and take concrete steps to improve the quality of data. second, efforts should be made to resolve disputes properly and establish a flexible and highly efficient dispute resolution mechanism. dispute resolution is important to the building and operation of individual credit information database. on the one hand, it helps us to detect mistakes in the database and enhance the quality of the database. moreover, whether there is an efficient dispute resolution mechanism have a direct bearing on rights protection of parties involved and the public image of the databases and banking institutions. since the databases were put into use, they have received extensive attention and support form the general public and media, which is a good start for credit information development. however, we should be fully aware that, without an efficient dispute resolution mechanism, public support to and recognition of the databases and banking system will be definitely weakened, resulting in unnecessary troubles. thirdly, credit officers should be well trained to make full use of the information provided by the enterprise and individual credit information database. first, credit officers should be trained to properly understand the information of credit report. second, credit officers should be trained to make enquiry with the database in line with the requirements and receive written authorization from the applicant for enquiry in case of application examination. third, credit officers should be trained to turn down loan applications in a proper manner, to avoid misleading the public to regard the enterprise and individual credit information database as a system of black lists. fourthly, wider use of the enterprise and individual credit information database should