the impact of climate change on aggregated economic variables will not necessarily be substantial in the next few years, the situation for individual businesses might be different. norwegian firms will have to be prepared for the introduction of new climate mitigation measures and new, more environmentally friendly technology. public attitudes and consumer demand patterns are also changing. many of norges bank ’ s regional network contacts report that they are being affected by the increased focus on climate and sustainability. 2 statutory emission limits and customer demands are steering investment and production methods in a greener direction. a number of retail trade contacts reported that sales are declining because customers are increasingly focused on sustainability. the trend towards lower meat consumption has, on the other hand, given a boost to aquaculture and fish farming. chart : carbon pricing in norway a number of industries are likely to have to comply with a stricter climate policy, particularly industries with low or zero carbon prices today. stricter climate policy requirements may also speed up the introduction of new technologies. some firms will have to undergo major changes, while others may gain competitive advantages. electricity production in norway is largely environmentally friendly and could be more so. the transition to a low - carbon economy may therefore provide opportunities for the norwegian business sector. on the other hand, our large oil and gas sector may expose the norwegian economy to transition risk. this was an issue that then governor of norges bank hermod skanland addressed as early as in 1989 : “ many accounts could be given of how they [ international climate agreements ] will affect prices and quantities in our production of oil and gas, ” said skanland, and he went on : “ but we cannot pretend that they will not be influenced by a climate policy we are pursuing ourselves. at the very least, they will increase uncertainty, and in sum, i believe, in a negative direction ”. 3 today, 30 years later, much of norway ’ s oil wealth has been converted into financial wealth. petroleum revenues have been transferred to the government pension fund global ( gpfg ) since 1996. petroleum revenue spending over the central government budget has been in line with the so - called fiscal rule since 2001. chart : from oil in the ground to financial wealth the dark blue bars in this chart are the present value of government petroleum revenues at different dates, while the light blue bars show the value of the gpfg. the norwegian government has used this model to convert north sea oil and gas wealth into a 3 / 7 bis central bankers

, which have been used for this purpose. consultation between regulators and regulated institutions ensures consistency between external regulations and internal risk control procedures. the sbp has developed a regular consultative mechanism whereby the views and comments of pakistan banking association are sought and incorporated in the draft policies, circulars and regulations. fourth, the role of market discipline and monitoring has to be enhanced. privatization of nationalized commercial banks ( ncbs ) is largely motivated by this particular consideration because these banks have ill - defined incentive structure and are not subject to the normal disciplinary pressures of the market. their owners - the government - do not systematically monitor their behavior and the market cannot exercise the corporate controls which, through the threat of removing incumbent management, is a discipline on managers to be efficient and not endanger the solvency of their banks. it is quite well known that management of the ncbs have faced pressures to make loans on political considerations. interference by the ministers and bureaucrats in the operations of such banks and the unwitting encouragement of bad banking practices can itself become a powerful ingredient in bank distress. after habib bank ’ s impending privatization, 80 percent of the banking assets in pakistan will be owned and managed by the private sector and thus become subject to market discipline and monitoring. it is for this reason that 20 percent of the shares of national bank of pakistan have been off - loaded for flotation at the karachi stock exchange. the feedback from the market in terms of its share prices will act as a powerful disciplining tool to the management and the board. fifth, intervention arrangements in the event of compliance failures ought to be credible and biting as they provide a deterrent against errant behavior by the bank managers, owners and directors. in the last three years, the sbp has cancelled the licence of one of the commercial banks - the first of its kind, has changed the ownership of two banks, allowed mergers and amalgamation of half a dozen banks, forced change in boards of directors and debarred a few directors and managers from banking profession. these punitive measures and weeding out process have helped strengthen the overall health and soundness of financial system in pakistan. sixth, the role of internal corporate governance arrangements within financial institutions has been defined, reinforced and closely monitored. in addition to the code of corporate governance prescribed by the secp the banks have been provided explicitly defined criteria for the selection of chief executives and directors. family representation on the boards has been limited to 25 percent and the remaining directors have to be drawn