##ulating detailed information about portfolio companies ’ climate risk and climate plans. in this year ’ s white paper, the ministry of finance proposes to allow norges bank to make decisions on its own initiative regarding observation or exclusion of companies under the climate criterion without advice from the council on ethics. up until now, the bank ’ s right of initiative under the guidelines has been limited to the coal criterion. exclusions have a different purpose from risk - based divestments. while risk - based divestments are based on financial considerations, the climate criterion is applied to fulfil an ethical obligation. norges bank manages substantial assets on behalf of the nation. high returns, responsible investments and transparency are key terms in the strategy adopted by the executive board for the bank ’ s investment management. our goals are ambitious, as they should and must be. i would now like to give the floor to the ceo of norges bank investment management nicolai tangen, who will report on investment management in more detail. 2 / 2 bis central bankers'speeches

jarle bergo : monetary policy, cyclical fluctuations and competitiveness address by mr jarle bergo, deputy governor of norges bank ( central bank of norway ), to the norwegian association of economists, 5 september 2002. the address is based on the assessments presented at norges bank ’ s press conference following the executive board ’ s monetary policy meeting on 7 august and on previous speeches. * 1. * * introduction thank you for giving me this opportunity to discuss the relationships between monetary policy, cyclical developments and competitiveness. there has been some debate about monetary policy this summer. part of this debate has focused on the role monetary policy can and should have in smoothing fluctuations in the real economy and safeguarding competitiveness in the norwegian business sector. some have maintained that we place too much weight on reaching the inflation target. statements like this should be discussed in the light of what monetary policy can be used for and of the broad effects on the economy of various monetary policy objectives. only when we have clarified our options, can we discuss whether the emphasis on the inflation target is “ too great ”, “ too little ” or “ just right ”. i hope to be able to offer some clarification today. i think it will also become clear that norges bank in its implementation of monetary policy consciously seeks to avoid unnecessary disturbances in the real economy. first of all, i would like to present a theoretical outline of how monetary policy works and then indicate some relevant and realistic monetary policy objectives. i will then discuss and assess norwegian monetary policy on this basis, including the trade - offs we face in economic policy. it is important to note that it is a question of trade - offs. we simply cannot have everything we want. 2a. how does monetary policy influence the economy? monetary policy affects the economy through several channels, together referred to as the transmission mechanism of monetary policy. in a closed economy, monetary policy mainly works by influencing demand through changes in the real interest rate. in an open economy, monetary policy also works through changes in the exchange rate. let us make a stylised review of what happens if the central bank raises the key interest rate. in the short and medium term, prices are relatively rigid. as a result, the short and longer real rates of interest also tend to increase when the nominal interest rate is raised. in addition, there is both a nominal and a real appreciation of the exchange rate. the presentation is largely based on svensson, lars e. o