. 1 / 4 bis - central bankers'speeches as we do so, and look ahead to possible future systemic threats, it is important to start with the broader macro - financial backdrop. because shocks never happen in a vacuum. for much of the past 15 years, financial conditions have been highly accommodative. this spurred risk taking. at the esrb we sometimes called it the'hunt for yield '. a hunt in which some financial institutions relied on business models based on the presumption of low and stable interest rates. an old banker's adage states :'it's not the speed that kills, but the sudden stop'3. so, with those accommodative financial conditions coming to a swift end, the vulnerabilities that developed during the'hunt for yield'could be crystalised. financial markets and indeed regulators did not fully anticipate the'sudden stop '. but, both the esrb and the fsb had been warning about the developing vulnerabilities for some time. there was bound to be transition risk for financial institutions and the system at large when coming from such a long period of low interest rates. today, we find ourselves in that transition phase. at the same time, there is limited fiscal space in many countries. this is the consequence of elevated public debt, alongside a higher interest rate environment. and, of course, until inflation is returned to target, monetary policy space is similarly constrained. thus, the scope to lean against an economic downturn is more limited than in the past. for this reason, financial policy makers need to be especially vigilant. with this backdrop in mind, let me now turn to the recent disruptions affecting the global financial sector, across both banks and non - banks. as i said, in the aftermath of such events, it is important to draw the right lessons and to respond. the fsb is working hard on both. earlier this year, the banking sector saw the most significant system - wide stress since the gfc, in terms of both scale and scope. a global systemically important bank in switzerland had to be rescued, and several medium - sized us - based banks failed. these events highlighted a number of issues for financial stability : first and foremost, the importance of banks'own risk management and governance practices was again brought to the fore. second, we witnessed an unprecedented speed of bank runs. this underscores the growing impact of technology and social media

in the estimated permanent income, as oil prices and resource estimates have changed. the future development of the value of the fund is also uncertain, but at least the value of the fund at a given point and the actual return from year to year are observable. it is also worth noting that the proposed rule enabled a smooth transition from the actual level of spending at the time. in comparison, a permanent income rule would have implied a very large increase in spending back in 2001. in 2017 the estimated real return on the fund was revised downwards from 4 percent to 3 percent. this spurred no significant debate and was largely considered more of a technical matter. this serves to illustrate the broad political consensus regarding the fiscal framework. the 5 / 6 bis central bankers'speeches framework has served us well for 17 years, and seems set to continue to do so. conclusion graph : conclusion the norwegian economy has benefited tremendously from the oil and gas resources. public and private consumption have increased. solid public finances have provided scope to make active use of fiscal policy to counter external economic shocks. the accumulated wealth in the fund is approaching three times mainland gdp, enabling a lasting annual income contribution to future welfare of 6 - 8 percent of mainland gdp in the coming decades. the present guidelines allow temporary income flows to be transformed into permanent gains, benefiting all future generations. they are simple and robust. they take account of the effects on the rest of the economy and on the economic policy debate. norway ’ s experience serves as an example of why temporary shocks in general, and more specifically discoveries of natural resources, justify deviations from a balanced current account. deficits used to finance investments that generated high returns have served us well. i guess there is no such thing in the real world as an “ optimal spending rule ”. in the norwegian case, there were definitely lessons to be learned during the first two - three decades of resource development. still, over the years, and in particular with the present fiscal rule, i think we have struck a reasonable balance. thank you for your attention. 1 bergsten, c. f. and gagnon, j. ( 2017 ) : currency conflict and trade policy. a new strategy for the united states, peterson institute for international economics 2 gagnon, j. ( 2018 ) : can a country save too much? the case of norway, policy brief 18 – 7, peterson institute for international economics 3 corden and neary ( 1982 ) : booming sector and de - industrialisation