from having to pay for systemically relevant banks by establishing a resolution fund paid for by banks. it will take eight years for the fund to reach its target level of 55 billion euro. is this not too little, too late? it will be a quite significant amount, taking into account several other safety buffers. first, banks have considerably increased their own funds in recent years. second, the resolution fund will only be used after contributions have been made from shareholders and creditors. these could reach up to 8 % of liabilities, which is already a significant amount. thus the overall loss - absorbing capacity of banks has increased considerably. the resolution fund comes on top of this. the third pillar of banking union, the creation of a european fund to guarantee savings deposits, has come to a standstill. should we be worried? not unduly, because deposits are already guaranteed up to 100, 000 euro at the national level. but more importantly : if the first two pillars of the banking union work properly and secure the stability of individual banks and the banking system, the need for a joint fund significantly diminishes. the stress tests revealed worrying weaknesses in italian banks. is italy the weak link in the euro area? as supervisors we do not think in terms of countries, but of banks ’ business and risk profiles. each bank operates differently and therefore has to face different problems ; it would be unwise not to see them individually. bis central bankers ’ speeches

is strictly commercial : to maximise returns within the guidelines defined by the government. all investment decisions are made by norges bank investment management, a separate division within the central bank. neither norges bank ’ s executive board nor the ministry of finance is involved in any individual investment decisions. this governance structure was set up to ensure that the fund was not used as an instrument of foreign policy. the purpose of the fund is to ensure that future generations receive their fair share of norway ’ s petroleum wealth. to achieve this, the fund was designed to be invested for the long term. size and a long investment horizon are the fund ’ s two key characteristics. together, they form the backbone of the fund ’ s investment strategy : • first, the fund ’ s long investment horizon implies substantial risk - taking capacity. we are able to act as a countercyclical investor. • second, the fund ’ s size makes it possible to take advantage of investment opportunities worldwide, in a number of asset classes. • thirdly, a fund owned by the government must be highly transparent, not only to the norwegian public but also in an international context. let me elaborate on these aspects. in the early summer of 2007, the fund ’ s strategic equity share was raised from 40 to 60 percent. from summer 2007 to 2009, the fund bought equities worth usd 180 billion in international markets, equivalent to 0. 5 percent of all globally listed equities. the largest volume of transactions was carried out in the midst of the financial crisis of 2008 and 2009. the long - term horizon also enables us to invest countercyclically, by rebalancing asset classes : if the equity share increases by more than 4 percentage points from the target weight of 60 percent, we will sell equities and buy bonds. conversely, if the equity share drops below 56 percent, we will sell bonds and buy equities. the capacity to withstand market turmoil was demonstrated during the financial crisis in 2008 and 2009. for a period of 18 months, the fund ’ s losses totalled roughly usd 120 billion – more than 25 percent of norway ’ s gdp. the losses did not go unnoticed. they led to lively public debate on the fund ’ s investment strategy. however, the conclusion drawn was that the strategy was robust, and the government remained committed to it. 10 norway would have to accept that the fund ’ s capital would fluctuate, sometimes dramatically, given the high equity share. indeed,