substantial. ahead of both the banking crisis of the 1990s and the financial crisis, lending growth far outpaced growth in deposits. banks relied increasingly on short - term wholesale funding, exacerbating the vulnerability of the banking system itself. wholesale funding often dries up or becomes considerably more expensive in turbulent times. banking regulation must therefore include a macroprudential perspective. the purpose is to dampen the build - up of systemic risk and ensure that the banking system as a whole is resilient to shocks. in a number of countries, frameworks are now being established for macroprudential regulation, along with efforts to put policy instruments in place. in norway, the financial institutions act has recently been amended, with effect from july 2013. the amendments have been harmonised with new eu regulations. the amended act sets higher capital requirements for norwegian banks and includes a countercyclical capital buffer. the amendments also authorise the ministry of finance to issue regulations on the use of other macroprudential instruments. preferably, such instruments should focus directly on the sources of systemic risk. this is the principle that is applied when taxes are imposed directly on environmentally hazardous products. however, in practice, this is difficult to accomplish in the financial system. systemic risk can be difficult to identify and has numerous sources. the financial system and its interaction with the real economy is complex, and problems spread across borders. the financial crisis was a clear reminder of this. we have experienced on previous occasions that some financial sector operators find ways to evade regulations. new sources and forms of systemic risk may also arise. it is difficult to imagine instruments that can fully prevent financial crises from developing. yet it is still appropriate to increase banks ’ resilience to losses when systemic risk increases. this is the primary purpose of the countercyclical capital buffer. countercyclical capital buffer the new framework contains a number of new capital adequacy requirements. there are new buffer requirements in addition to the minimum common equity tier 1 ( cet1 ) capital bis central bankers ’ speeches ratio requirement. banks that do not meet the buffer requirements will face restrictions on distributing dividend and paying out bonuses. the capital conservation buffer is permanent and independent of systemic risk. the systemic risk buffer is designed to act as a buffer against more persistent systemic risk and will apply to all norwegian banks. in addition, the largest banks will be subject to a separate capital buffer requirement. finanstilsynet ( financial supervisory authority

also reminded us that stories are the core of our lives and that they are not something that is planned, but something that is created and won every day a€ “ just like the freedom. therefore, the national bank will continue to write and add to the monetary chapter of our story, working professionally and responsibly for the benefit of the citizens, guided by the european central banking principles. congratulations on the anniversary and the celebration of the stable denar which is something that belongs to all of us, the citizens, the present and future generations! 4 / 4 bis - central bankers'speeches