it is perhaps easier to envisage that new currencies may be attractive for certain types of transactions, for instance, cross - border payments. they could of course take market shares from existing payment solutions, but would not entail a fundamental transformation of the financial system. what about credit and saving in a world where the private sector has abandoned the norwegian krone? if bank money is replaced by a cryptocurrency whose quantity increases through “ mining ” and remains constant in the long run, no credit institution will be able create money by extending loans. some consider this a guarantee against instability and crises. yet, without banks to assume liquidity risk, credit may become more expensive. in order to raise a long - term loan, someone will have to be found who is willing to tie up their savings for just as long. a possible solution is the emergence of new institutions that take on the risk by making long - term loans and raising short - term funding in cryptocurrency. but they will be left standing without the backing of a central bank that can relieve some of the risk and intervene in a crisis. perhaps the attributes of today ’ s credit market can be imitated if a cryptocurrency functions as a means of settlement between credit institutions, as central bank reserves do today. in that case, the cryptocurrency will replace the central bank ’ s settlement system. on top of this system, banks or similar credit institutions can create money by lending, more or less as they do today. but it is uncertain how credit institutions will behave in a more decentralised system such as this one. it also raises new questions about where the responsibility for licensing and regulation should lie, especially if the system operates independently of national borders. this poses a risk of increased instability and more frequent crisis. norges bank ’ s role chart : norges bank is tasked with ensuring : norges bank plays a key role in the financial system. norges bank is responsible for keeping inflation low and stable. that secures confidence in the norwegian krone. we are also responsible for promoting financial stability and an efficient and secure payment system. banks settle obligations between themselves over accounts in the central bank. if necessary, we can 5 / 7 bis central bankers'speeches provide banks with additional liquidity. at the same time, our role as the bankers ’ bank gives us a channel into the wider economy, which we use to implement monetary policy. a change in our policy

all the money we spend daily is deposit money created by a bank. there is little likelihood that many customers will withdraw large amounts simultaneously. banks can therefore create far more deposits than they can pay out at the same time. 6 but a bank cannot extend loans and create deposits without limitations. first, it must assess the customer ’ s debt - servicing capacity, ie credit risk. second, the bank must assess the degree of liquidity risk associated with lending long and creating deposits that customers can withdraw at any time. third, it must comply with statutory rules. banks ’ willingness to assume some degree of liquidity risk is a public good. in its absence, we would have less access to long - term loans and money in the form of bank deposits. on the other hand, too much liquidity risk entails a risk of instability and crises like the one we experienced in 2008. banking regulation implicitly provides a trade - off between these considerations. the other main activity of banks is payment services, which are services we use virtually every day. today, most people in norway receive money as a bank deposit directly into their account. as long as there are payment solutions that give us cheap and simple access to money, the account is an efficient and safe wallet. chart : banks provide payment services but how is it that bank deposits can become money that we can use as payment? an important pre - condition is that there is an infrastructure to enable deposits to be efficiently transferred 2 / 7 bis central bankers'speeches between customers and banks. as the bankers ’ bank, norges bank creates the money banks use to pay each other, so - called central bank reserves, which are the banks ’ deposits at the central bank. transfers of customer deposits between banks can take place without frictions because a corresponding amount of central bank reserves are transferred between banks ’ own accounts at norges bank, where banks have a common and trusted means of payment and settlement system. this helps ensure that there is no difference between the money created by dnb and money created by nordea. the money is interchangeable. for us, it is all norwegian kroner. as such, banks play a key role in delivering services we want from the financial system, albeit subject to a framework designed by the norwegian authorities. the banking sector is more strictly regulated than most sectors of the economy. with the right to create money comes obligations. competition from new participants chart : competition from new participants many of the services banks offer can be provided by others