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Monetary Policy Report with financial stability assessment 1/19
Get PDFMonetary Policy Report with financial stability assessment is published four times a year, in March, June, September and December. The Report assesses the interest rate outlook and forms the basis for Norges Bank’s advice on the level of the countercyclical capital buffer. The Report includes projections of developments in the Norwegian and global economy. At its meeting on 13 March 2019, the Executive Boards discussed the economic outlook, the monetary policy stance and the need for a countercyclical capital buffer for banks. On the basis of this discussion and a recommendation from Norges Bank’s management, the Executive Board made its decision on the policy rate at its meeting on 20 March 2019. The Executive Board also approved Norges Bank’s advice to the Ministry of Finance on the level of the countercyclical capital buffer.publishedVersio
Collateral Damaged? Priority Structure, Credit Supply, and Firm Performance
Get PDFA unique legal reform in 2004 in Sweden redistributed collateral rights from banks holding floating liens to unsecured creditors without changing the value of assets on firms’ balance sheets. Using a country-wide panel of all incorporated firms, we document that a zero-sum redistribution of collateral rights and the resulting reduction in collateral capacity towards banks contracts the amount and maturity of corporate debt and leads firms to slow investment and forego growth. Altering their allocation of assets, firms reduce particularly those assets with a low collateralizable value for banks and also hoard more cash. However, the reform has no impact on corporate capital intensity or efficiency, suggesting that under these newly binding credit constraints firms simply shrink their operationspublishedVersio
Pengepolitisk rapport med vurdering av finansiell stabilitet 2/19
Get PDFPå møtet 12. juni 2019 drøftet hovedstyret de økonomiske utsiktene, hovedlinjene i pengepolitikken og behovet for en motsyklisk kapitalbuffer i bankene. På grunnlag av denne drøftingen og en tilråding fra bankens ledelse fattet hovedstyret i møtet 19. juni 2019 vedtak om styringsrenten. Hovedstyret vedtok også Norges Banks råd til Finansdepartementet om nivået på den motsykliske kapitalbufferen. Rapporten inneholder Norges Banks vurdering av utsiktene for styringsrenten og behovet for en motsyklisk kapitalbuffer i bankene. Vurderingene er basert på de økonomiske anslagene som fremgår av rapporten. Utgis fire ganger årlig: mars, juni, september og desember
Monetary Policy Report with financial stability assessment 3/19
Get PDFAt its meeting on 11 September 2019, the Executive Board discussed the economic outlook, the monetary policy stance and the need for a countercyclical capital buffer for banks. On the basis of this discussion and a recommendation from Norges Bank’s management, the Executive Board made its decision on the policy rate at its meeting on 18 September 2019. The Executive Board also approved Norges Bank’s advice to the Ministry of Finance on the level of the countercyclical capital buffer.publishedVersio
How much CET1 capital must banks set aside for commercial real estate exposures?
Get PDFThe Ministry of Finance has proposed a temporary capital requirement (risk weight floor) for commercial real estate (CRE) exposures in Norway, applicable to the largest banks. CRE is the sector where banks have historically incurred the largest losses during crises. Since CRE loan losses are low in normal times, capital requirements for CRE loans should be based on losses incurred during crises. My calculations suggest that the level of capital required with the proposed risk weight floor is high enough to cover banks’ CRE loan losses[1] during the downturn in 2002-03, but lower than the CRE loan losses incurred during the banking crisis of 1988-93. This also applies if I assume that the profit generated by CRE loans cover some of the losses. On the other hand, risk weight floors should not be set to a level that weakens banks’ incentives to provide low-risk loans, implying that such minimum requirements should not be set too high. This will be of particular importance for lending segments where credit risk varies widely, such as the CRE market. All in all, this suggests that the proposed minimum requirement is at a reasonable level.publishedVersio
Liquidity indicators for the Norwegian government bond market
Get PDFAn objective of Norges Bank Government Debt Management is to meet the government’s borrowing requirement at the lowest possible cost. At the same time, Government Debt Management shall seek to maintain a yield curve out to 10 years. Market liquidity is of importance for both objectives. This article investigates liquidity developments in the Norwegian government bond market since 2010 with the aid of four indicators that comprise a composite liquidity index. I also examine whether Norwegian banks’ funding costs have affected government bond market liquidity in the period 2010–2018, but find no clear correlation.publishedVersio
I dag lanseres den nye 1000-kroneseddelen
Get PDFSentralbanksjef Øystein Olsens tale på Akvariet i Bergen i forbindelse med lanseringen av den nye 1000-kroneseddelen 14. november 2019publishedVersio
Monetary Policy Report with financial stability assessment 4/19
Get PDFAt its meeting on 11 December 2019, the Executive Board discussed the economic outlook, the monetary policy stance and the need for a countercyclical capital buffer for banks. On the basis of this discussion and a recommendation from Norges Bank’s management, the Executive Board made its decision on the policy rate at its meeting on 18 December 2019. The Executive Board also approved Norges Bank’s advice to the Ministry of Finance on the level of the countercyclical capital buffer.publishedVersio
Financial Stability Report 2019 : vulnerabilities and Risks
Get PDFIn the annual Financial Stability Report, Norges Bank assesses vulnerabilities and risks in the financial system, with a focus on the long-term, structural features of banks, financial markets and the Norwegian economy that are of importance for financial stability. Norges Bank’s Monetary Policy Report with financial stability assessment includes an ongoing assessment of financial imbalances and the banking sector, Norges Bank’s monetary policy assessments and the decision basis for the countercyclical capital buffer for banks. In the Financial Infrastructure Report, Norges Bank assesses vulnerabilities and risks in the financial infrastructure. The report Norway’s Financial System provides a comprehensive overview of Norway’s financial system, its tasks and the performance of these tasks.publishedVersio
Dutch disease dynamics reconsidered
Get PDFIn this paper we develop the first model to incorporate the dynamic productivity consequences of both the spending effect and the resource movement effect of oil abundance. We show that doing so dramatically alters the conclusions drawn from earlier models of learning by doing (LBD) and the Dutch disease. In particular, the resource movement effect suggests that the growth effects of natural resources are likely to be positive, turning previous growth results in the literature relying on the spending effect on their head. We motivate the relevance of our approach by the example of a major oil producer, Norway, where it seems clear that the predictions based on existing theory do not apply. Although the effects of an increase in the price of oil may resemble results found in the earlier Dutch disease literature, the effects of increased oil activity do not. Therefore, models that only focus on windfall gains due to increased spending potential from higher oil prices, would conclude - incorrectly based on our analysis - that the resource sector cannot be an engine of growth.publishedVersio