citizens, who appear to have fully accepted the euro as their currency. in terms of european economic integration, the introduction of the euro is often regarded as an end point. however, in my view, this is not the case. in addition to the political dimension of the introduction of the euro, representing as it does a step towards ever closer union, its introduction is also a catalyst for further economic integration in europe. this has already become apparent in the area of financial integration ; here increased integration has been brought about by market developments as well as policy initiatives, in particular the european commission ’ s goal to create a truly integrated european financial market by 2005. i should like to take the opportunity today to address another area where, at least in my view, the introduction of the euro has illustrated the need for more co - ordinated efforts in the european union. i refer in particular to an increased need to enhance the co - ordination of structural policies in europe, i. e. policies which aim to improve the functioning of market mechanisms and the operation of the economy as a whole. in my view, there are three reasons why such enhanced co - ordination of structural policies is necessary. first, the introduction of the euro has made exchange rate fluctuations obsolete as an instrument of adjustment. for instance, before the establishment of economic and monetary union ( emu ), divergent national economic developments could be addressed by a depreciation or appreciation of national currencies. in a monetary union, such adjustment has to take place via other mechanisms, such as price and wage adjustments, labour mobility, or, most unwanted, a temporary rise in unemployment. in order to avoid the latter, and to enhance economic adjustment via wages and prices so that it is comparable to the level of adjustment existing between regions of the united states, policies aiming at increasing the flexibility of the markets are necessary. second, in our monetary union, with increased trade and financial links between the member countries, the significance of spillovers from national economic policies has also increased. in other words, if governments embark on economic policies that are not sound, or hamper the functioning of their economies, the adverse consequences will not be limited to the country concerned, but will also have an impact on other countries participating in the euro area. hence, the increased risk of spillovers from insufficiently effective structural policies warrants enhanced co - ordination of such policies at the european level. finally, it has become increasingly clear - on the basis of both practical experience and

svein gjedrem : the economic outlook in norway address by mr svein gjedrem, governor of norges bank ( central bank of norway ), to invited foreign embassy representatives, norges bank, oslo, 22 march 2007. the address is based on the assessments presented at norges bank ’ s press conference following the executive board ’ s monetary policy meeting on 15 march, monetary policy report 1 / 07 and on previous speeches. please note that the text below may differ slightly from the actual presentation. the charts in pdf - format can be found on the norges bank ’ s website. * * * excellencies, ladies and gentlemen, first of all, i would like to welcome you to norges bank. this event gives me an opportunity to discuss developments in the norwegian economy and to present norges bank ’ s view of the economic outlook for norway. it also gives us an occasion to discuss other issues of mutual interest in an informal setting. the norwegian economy has been affected by several positive supply - side shocks over the last decade. i am thinking in terms of the effects from increased global trade and freer flow of labour across national borders. i want to discuss how these shocks have had an impact on economic growth and inflation. these shocks have also affected prices in the norwegian housing market, and they have had a strong impact on the income from the petroleum sector and thereby the transfer of funds to the norwegian petroleum fund. economic developments monetary policy in norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2. 5 per cent over time. norges bank operates a flexible inflation targeting regime. both variability in inflation and variability in output and employment are given weight in interest - rate setting. inflation decelerated markedly from the end of the 1980s to the mid - 1990s and has since been low and stable with considerably lower variability than earlier. over the past 5 - 10 years, inflation has been fairly close to, but somewhat lower than the target. the norwegian economy is now growing strongly, following a pronounced upswing since summer 2003. growth has been stronger than during the economic upturn in the mid - 1990s. the continuous growth period of recent years is the longest ever recorded in the quarterly national accounts, which includes figures back to 1978. average real growth rates for the past three years were well above 4 per cent. since the economic recovery started, it has gradually broadened. capacity utilisation is now high in most industries, and there