been established to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability. it comprises the g20, five other countries and international institutions and standard - setting bodies. international monetary and financial committee – the policy steering committee of the international monetary fund. only the g20 process, but also the imf as it will be perceived as increasingly guided and controlled by the g20. i referred earlier to a recent speech by the governor of the bank of england and i wish to do so again where he states : “ looking further ahead, the legitimacy and leadership of the g20 would be enhanced if it were seen as representing views of other countries too. that could be achieved if the g20 were to metamorphose into a governing council for the imf, and at the same time acquire a procedure for voting on decisions. ” needless to say, i agree with him, as did the managing director of the imf in a recent interview. 11 in an article in the financial times late last year, anders aslund, a senior fellow at your institute, argued in a refreshingly blunt manner for a change in the g20. 12 the ongoing efforts to change global governance should not be limited to the imf alone. in saying this, i repeat that i fully recognise the important role played by the g20 in the time of crisis. however, while the g20 continues to exist and even expands into policy areas as varied as food security, energy and climate change, its legitimacy and democratic foundations must be reinforced. this can be achieved by, for example, representation and participation on a rotating basis. everyone does not have to be present all the time. the constituency model of the imf and the world bank could be adopted, providing for the participation of other countries, even if only indirectly. in that vein, the g20 might be expanded by, say, four members in conjunction with the adoption of a structure which embraces the rest of the world. on the matters of economics and finance, i view the g20 as a complement, not an alternative, to the imf. an appropriate solution would be the recognition of the imf and the imfc as the statutory - based principal forum. g20 collaboration on these matters would be recast in the imfc or in an enhanced version in the council if the membership decides to activate the provisions on its establishment. the imfc is an institution of the imf

##udential measures. the institutional framework and the formulation of the measures vary. macroprudential policy will by its nature vary across countries. the credit cycle and systemic risk vary over time and across countries. that being the case, neither banks nor other economic agents should be surprised that macroprudential policy in norway differs from that of surrounding countries. in many countries, the central bank has a prominent role in macroprudential policy. monetary policy objectives and macroprudential objectives are not the same. monetary policy is aimed at securing low and stable inflation and is the first line of defence against cyclical fluctuations. macroprudential policy is aimed at strengthening the resilience of the financial system and curbing financial vulnerabilities that build up in the economy over time. macroprudential policy and monetary policy nevertheless share many features. in norges bank, we can build on the experience of monetary policy when providing advice on the size of the countercyclical capital buffer for banks. both macroprudential policy and monetary policy must be based on an assessment of the state of the norwegian economy and developments in credit, inflation, output and employment. the buffer works through banks, as does monetary policy. the analysis of the capital buffer therefore has much in common with the analysis we perform when setting the key policy rate. in our monetary policy analysis, we must assess whether output and employment lie above or below their long - term trends ; in our financial stability analysis, we must assess whether credit lies above or below its long - term trend. both policy areas must give weight to the risk of a build - up of financial imbalances. the communication of monetary policy also offers some lessons. whereas monetary policy was previously veiled in secrecy, we are now open about our view of the likely future interest rate path. the theoretical foundation for transparency builds on the notion that prices are sticky. adjusting prices goes smoother if central banks ’ response pattern is known. market participants then have a solid basis for forming expectations about future interest rates. the same line of reasoning may be valid with regard to transparency about our advice on the countercyclical capital buffer. it takes time for banks to adapt to changes in capital bis central bankers ’ speeches requirements. a predictable policy will facilitate the adjustment process. the size of the friction is difficult to assess. banks tend to restrict themselves to a very limited number when they present their options for increasing capital ratios. if banks choose to raise new equity capital