contributes to stabilising the krone exchange rate. we must, nevertheless, be prepared for fluctuations in the krone that are more in line with the fluctuations observed in other countries. changes in the global economy can affect the krone exchange rate. the exchange rate may also react to and contribute to curbing the effects of domestic disturbances. the floating exchange rate is by and large a well - suited instrument for absorbing unforeseen disturbances to the economy. a stronger krone may, for example, prevent demand pressures from translating into higher price inflation. as history and the experience of other countries have taught us, the real economic losses associated with eliminating high inflation and curbing inflation expectations are considerably higher than those associated with a variable nominal exchange rate. if oil prices fall to such a low level that investment on the norwegian shelf comes to a halt, a weaker krone would contribute to facilitating the restructuring in the business sector and the rest of the norwegian economy. historically, a stable krone exchange rate has been the nominal anchor in the norwegian economy. labour costs among trading partners provided an important reference. now, the inflation target is the nominal anchor. the norwegian krone has appreciated by 2½ per cent since the beginning of 2002 and by more than 8 per cent since the spring of 2000. high interest rate differentials and oil prices have played a part in this development. at present, the krone exchange rate is close to the levels in 1990 - 92 and 1996. the cost - competitiveness of norwegian manufacturing companies has deteriorated by 10 per cent since 1996. this is due entirely to pay increases awarded by manufacturing industry ’ s organisations and companies. underlying this cost inflation is a tight labour market that reflects high growth in employment in public and private services as well as extensive working hour reforms in recent years. the increase in labour costs is important when norges bank assesses the outlook for price inflation and sets interest rates. excessively high wage growth, both in manufacturing and other industries, will affect the internationally exposed sector through two channels. first, high wage growth will reduce earnings and employment. second, the interest rate will be increased. normally, this will lead to an appreciation of the krone, with a further reduction in earnings and employment. manufacturing will, therefore, feel the effects of excessively high wage growth to an even greater extent than earlier. at present, the labour market is relatively tight, which is reflected in high wage growth. in other countries, the situation is different, with slug

provided fertile soil for the trust the bundesbank has enjoyed as a defender of stable money up to the present day. the events in argentina in 2007 led to the initiation of a research project at the mit sloan school of management to collect price data from retailers on a daily basis using scraping technology. the project, currently referred to as the billion prices project ( see http : / / bpp. mit. edu / ) is primarily associated with the mit researchers alberto cavallo and roberto rigobon. the project started on a very small scale where in 2007. cavallo used the technology to collect price data from supermarkets across argentina, and he showed that inflation in argentina was between twice and three times as high reported in the official figures. today, the project is being continued under the direction of the private company pricestats, which provides data collection and processing services. the billion prices project currently involves the collection of price information from more than 70 countries and daily inflation series are published for over 20 of them. fortunately, argentina proved to be the only country where price indices using the new scraping technology bis central bankers ’ speeches situation in norway in the 1950s, when the government subsidised some goods in the index to avoid automatic wage increases. 22 the monetary system has also become more intricate along another dimension. today, cash accounts for only 5 percent of the money supply. payments are primarily made using deposit money, which involves electronic signals created by the banks themselves, via cards, mobile phones or online payments. 23 millions of transactions between individuals, companies and banks take place every day. these payments are settled at norges bank four times daily by transferring money between banks ’ accounts in norges bank. norges bank does not regulate the issuance of deposit money directly. by setting the interest rate on banks ’ sight deposits with norges bank and by securing settlements between the banks, the central bank is nevertheless the fundament of a vast and complex payment system. 24 the central bank / norges bank history has shown that monarchs are not always to be trusted to safeguard the monetary system. 25 an institutional solution is to delegate the task of issuing money to a central bank and shield it from the authorities ’ temptation to focus on short - term interests. 26 were systematically on a much higher level than the official inflation figures. thus, it appears that in today ’ s open societies, it is difficult to conceal true developments. incidentally, argentine inflation figures from pricestats continue to show much higher