development has been another concern. the rbi ’ s role has included setting up new institutions, encouraging the use of technology, developing markets, and expanding financial inclusion. in the coming year, we will have many new players in the banking eco - system, such as payments banks, small finance banks and possibly a postal bank competing with existing universal banks, regional rural banks, cooperative banks, and a variety of non - bank finance companies. the use of technology has also expanded from the days when accounts were maintained manually in ledgers and unions called for strikes at the very mention of the word computers. today, some banks allow customers to do all their banking transactions on a mobile phone, without entering a branch or touching a pen. the reserve bank ’ s intent is to create an ownership neutral, institution neutral, technology agnostic level competitive arena. for example, technologies enabling touch - and - go payments will find use even as banks focus on acquiring and analysing information and reducing transactions costs as they compete to extend financial services to all. the rbi ’ s state - of - the - art payments system will support technology, even as the rbi strengthens its cyber - supervision and cyber - security. we also need deep markets to absorb risks that stay too often in banks or in corporations. here too our track record has been strong. though many developing country governments bis central bankers ’ speeches are forced to borrow only in foreign currency, the reserve bank has fostered a liquid rupee government bond market, where the government today is able to contemplate issuing 40 year bonds. the rupee is truly becoming international as foreign institutions queue up to issue rupee denominated bonds. new products supported by the rbi, such as the recently introduced interest rate futures contract, are doing a roaring business on exchanges. our tasks are far from over. the nation has enormous financing needs in infrastructure, and far too many of our banks already have too much exposure. big corporate infrastructure players have also taken too much debt. the required national push to finance infrastructure should not override financial stability, which is key to national security. going forward, we need to develop new sources of risk capital so that our infrastructure needs can be financed with moderate amount of debt, even as we help the system deleverage. perhaps the country ’ s most important financial challenge, which is the theme of the conference today, is to bring financial services to every doorstep and to every small enterprise. the poor are still too far away from, or too

will then move towards the target and output will move towards potential output. by the same token, if there are pressures in the economy and inflation is high, a tighter monetary stance will restrain both activity and inflationary pressures. in such situations, it may be desirable to bring inflation back to target quickly. there is no conflict of objectives. low inflation in norway is not the result of declining demand, activity or employment, but is rather a result of favourable developments on the supply side both in the norwegian and international economy. the integration of new emerging economies such as china and india into world trade, in conjunction with lower tariffs and reduced trade barriers, has contributed to a decline in prices for imported finished goods. this development has probably been most noticeable for clothing and footwear and audiovisual equipment. new producer countries with very low cost levels and increasingly more efficient production have contributed to a low rise in prices for other goods as well. global competition has intensified and productivity growth has been high both in norway and abroad. competition has also increased in norway in a number of industries. the airline industry has perhaps been in particular focus, where the entry of the airline norwegian in the norwegian market has resulted in substantially lower air fares. in the retail trade we have also witnessed the impact of more efficient purchasing schemes, a larger number of chains and intensified competition. margins and prices are falling in the financial industry. the rise in prices, for example in the hotel and restaurant industry, is surprisingly low. in the labour market, we see traces of increased competition and a more flexible supply of labour as a result of the accession of new countries to the eu and greater mobility in the international labour force. these developments may have contributed to keeping wage growth at a lower level than would otherwise have been the case. low import prices, increased efficiency and intensified competition in both product and labour markets are probably the main reasons why inflation is still very low, even three years into this upturn. when economic developments are marked by favourable developments on the supply side both internationally and in norway, the challenges facing monetary policy are different from those arising when developments are marked by demand - side conditions. a favourable supply - side shock may result in both lower inflation and higher output. a conflict may now arise between stabilising inflation at target and stabilising developments in output and employment. not all supply - side disturbances will be of the same nature. some may increase potential output permanently and enable the economy, at least for a period, to grow more rapidly