rate, weight is also given to stabilising developments in output and employment. for monetary policy to contribute to stabilising developments in output and employment, there must be confidence that the inflation target will be reached. inflation will not be at target at all times, but if there is confidence in monetary policy, expected inflation will be close to the inflation target over time, which in itself contributes to stabilising inflation. norges bank ’ s communication of monetary policy aims to stabilise inflation expectations by giving the reasons for and explaining interest rate setting. by publishing its interest rate forecasts and monetary policy strategy, norges bank has made it easier for others to understand and evaluate monetary policy. it is my objective to continue and enhance the bank ’ s analysis and communication. since march of this year our monetary policy reports have included a summary of the executive board ’ s discussion of monetary policy prior to the reports. chart : surplus liquidity in the banking system to be effective, the key policy rate must have an impact on market rates. norges bank supplies liquidity to banks to bring short - term money market rates down closer to the key policy rate. surplus liquidity in the banking system is kept as sight deposits at norges bank. the redistribution of interbank liquidity does not function adequately. in 2010 norges bank had to maintain high liquidity in the banking system to keep short - term money market rates close to the key policy rate. to dampen demand for central bank liquidity and promote increased activity in the money market, norges bank ’ s executive board approved changes in the system for managing liquidity in the banking system in december 2010. under the new regulation, only a certain amount of banks ’ deposits – a quota – will bear interest at the key policy rate. deposits in excess of this quota will bear a lower interest rate. this will give banks a stronger financial incentive to redistribute liquidity among themselves, making the norwegian money market function more effectively. the new system is expected to take effect from 3 october of this year. 3. from financial crisis to debt crisis chart : general government gross debt the experience of recent years has shown the costs of financial instability in many countries. global economic growth has recovered, but the effects of the financial crisis are still visible and will be so for some time ahead. financial crises tend to be followed by debt crises. fiscal policy was used actively in most countries to dampen the effects of the financial crisis. the mistakes

understanding of climate risk, seeking to address those risks through upskilling, identifying useable tools and frameworks, raising awareness, and taking leadership applies to all participants in the financial system – including regulators – and we are supportive of many of the recommendations. i am particularly drawn to the new industry narrative recommendation, which proposes to articulate a coherent story on what role the industry is playing in support of wider climate goals. in my view, the establishment of the climate forum and the publication of this report is a substantial first step in building that narrative. but there is no doubt that we are very much in the early days of this journey. and while we can expect the regulations and industry best practices for meeting those regulations to evolve – there is a need to further embed climate risk and sustainable finance within our organisations and that can only happen through building capacity. as i have said before while the path toward a net - zero economy is a difficult one, it is nevertheless one that we must all walk together. my thanks again to the working group for making a substantive contribution in that journey with this report and i look forward to the rest of the event this morning. 2 / 2 bis - central bankers'speeches