, the evidence behind decisions and the motivations of the other. in this way, the financial services conference, our industry forum, the retail payments forum and our climate and sustainable finance forum give structure to those conversations. it also involves, for us, regular and deep engagement with policy makers at home and abroad. for our part, we will continue to enhance our processes, for example, around our gatekeeping role, to encourage early engagement, including through our innovation hub, and to provide clear published guidance. we have the humility to know that no - one gets it right all the time. i welcome feedback, and i encourage you to provide feedback to us. we are always open to dialogue and discussion but not to be less demanding when it comes to our supervision. how financial services can respond to change so now turning to the challenges for firms and all of you working in financial services. what do we expect regulated financial services firms to do in response to the current environment? the foundations are familiar to you. in a very uncertain and increasingly complex environment, firms need to ensure that they have sufficient resources, sustainable business models and effective risk management to mitigate against the risks that they face. this obviously differs across sectors and firms. but the key thing is for firms, and their leaders at the board and in management, to be dynamic in their understanding of the risks faced in the context of a rapidly changing environment. to understand risks in the system and in the firms that they run, people in leadership positions must be fit and proper. without this, the firms, the system and end - users are exposed to unnecessary harm. a culture where there is a commitment to high standards and values which shape the behaviours and mind - sets within a firm is important. risk management and control frameworks should be appropriate to the nature, scale and complexity of the business and where firms are experiencing material and rapid growth, their risk management framework must keep pace with the growth. these criteria, applied proportionately, are the building blocks of a resilient and trustworthy financial system. i think they are easily understood and reasonable. in the current environment, these principles not only hold true, but are more important than ever, and are foundational for firms and the wider sector to withstand and address challenges ahead. conclusion - a leadership challenge a leadership challenge for my colleagues and i in the central bank is to regulate in a way that is balanced and proportionate, effective and fair and delivers the right outcomes. we operate

low as possible. if the support schemes are too favourable, we risk undermining the banks ’ own motivation to maintain sound credit and liquidity policies. those who take risks must also be prepared to bear the losses. second, loans should only be given to banks that are solvent. the central bank ’ s role is not to help recapitalise banks. again, there is an important underlying principle here. if we are to take risk with our collective public money, then government funds must be used. and the decision to do so must be taken by a democratically elected body. third, both the scale and duration of support measures targeting financial markets should be limited. large - scale and protracted support schemes can impair normal market mechanisms. in keeping with the third principle, the extraordinary measures that norges bank introduced to support the smooth functioning of financial markets during the pandemic have now been unwound. the primary objective of monetary policy is low and stable inflation low and stable inflation is a main objective for norges bank. persistently high inflation is costly for society. it leads to uncertainty about the value of money and is an obstacle to planning. at the same time, some inflation is beneficial because it provides economic flexibility. during nicolai rygg ’ s time the krone was pegged to gold, the anchor. today, we aim to keep annual consumer price inflation at close to 2 percent over time ( chart 3 ). but our eye is not focused on the inflation target alone. as long as there is confidence that inflation will remain low and stable over time, variations around the inflation target entail limited economic and social costs. 3 norges bank ( 2021 ) “ norges bank ’ s liquidity policy : principles and design ”. norges bank papers 2 / 2021. norges bank chart 3 low and stable inflation is a primary objective economic perspectives 17 february 2022 consumer price index. twelve - month change. percent – 2 inflation inflation target five - year moving average – 2 sources : statistics norway and norges bank norway has a flexible inflation targeting regime. 4 monetary policy also aims to promote high and stable employment and mitigate the build - up of financial imbalances. high employment is beneficial for economic growth, for financing social benefit schemes and for the financial and living situation of individuals. financial imbalances can lead to a pronounced economic downturn. this is why we will, especially in an environment of very low interest rates, also take into consideration the