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	Monetary policy NBIM Financial stability Payment systems Notes and coins About Norges Bank Press room Speeches, articles Publications Statistics Research	Print Frequently asked questions Below you will find answers to some of the most frequently asked questions about topics such as banking services, the exchange rate, the gold reserves, interest rates and notes and coins. About Norges Bank Does Norges Bank offer tours? Is it possible to arrange for the Central Bank Governor or others in Norges Bank to speak at a conference that we are planning? Banking services I think that my bank has made a mistake. May I file a complaint with Norges Bank? Exchange rate What is an exchange rate? What is meant by fixed and floating exchange rates? Where can I find exchange rate figures? What sort of exchange rates does Norges Bank quote? When are the exchange rates published? Can I trade on the basis of Norges Bank's exchange rates? What are the foreign exchange reserves? What are claims on the IMF? What are foreign exchange market interventions? Gold reserves How large are the gold reserves in Norges Bank? When was Norges Bank's gold sold? Can I buy gold in Norges Bank? What is the price of one kilo of gold? Government Pension Fund - Global (former Petroleum Fund) How much has the Pension Fund earned/lost? What is the forecast for the size of the Pension Fund? What ethical rules apply to the Pension Fund's investments? Where is the Pension Fund allowed to invest? What strategy does the Pension Fund follow? Does the Pension Fund invest in private equities? Does the Pension Fund invest in hedge funds? Does the Pension Fund invest in real property? Can the Pension Fund invest in Norwegian equities? Does the Pension Fund invest in emerging markets? Which companies does the Pension Fund have equities in? Inflation What is inflation? How does inflation affect my personal finances? Where can I find inflation figures? Monetary policy What is monetary policy? Who is responsible for monetary policy? What is the objective of monetary policy? Why is low and stable inflation an objective? Why do we want to avoid deflation? Which measure for inflation does Norges Bank emphasise? What are the monetary policy instruments? What is the key rate? What is Norges Bank's discount rate? How does Norges Bank set the key rate? What is flexible inflation targeting? How does a change in the interest rate affect the economy? What is Norges Bank's Executive Board? Are the minutes of the Executive Board meetings published? What is the monetary policy strategy? Notes and coins Do old banknotes and coins have collector value? Can I use old banknotes and coins as a means of payment? What do I do with notes and coins that are no longer legal tender? How can I obtain unused notes and coins? How can I determine whether a note is genuine? About Norges Bank Does Norges Bank offer tours? No, we do not provide tours for the general public. If you would like a glimpse of Norges Bank, we can recommend "Rundtur i Norges Bank" which presents the bank building and a selection of the Bank's art collection. Rundtur i Norges Bank Is it possible to arrange for the Central Bank Governor or others in Norges Bank to speak at a conference that we are planning? The Central Bank Governor, the Deputy Governor and others at Norges Bank have a number of speaking engagements during the year. The Director of Communications is responsible for coordinating the management's speeches and lectures and will communicate your request to the individuals or departments concerned. Communications Department To contents >> Banking services I think that my bank has made a mistake. May I file a complaint with Norges Bank? You should contact the Complaints Board for Consumers in Banking and Finance Matters. The Complaints Board handles complaints concerning guarantees, loans, checking and wage accounts, ATM cards or other agreements. You must try to resolve the issue with the bank or financial institution before you can file a complaint with the Complaints Board. The Complaints Board for Consumers in Banking and Finance Matters To contents >> Exchange rate What is an exchange rate? An exchange rate is the price of a country's currency measured against that of another country, for example NOK per euro. The international foreign exchange market determines the exchange rate by creating balance between total demand for and supply of foreign currency. What is meant by fixed and floating exchange rates? With a fixed exchange rate regime, the central bank is actively involved in the purchase and sale of currency in order to maintain the official exchange rate. With a floating exchange rate, as is the case in Norway, the exchange rate will reflect supply and demand in the international foreign exchange market. The krone exchange rate will therefore reflect the international value of the Norwegian krone. Where can I find exchange rate figures? Today's exchange rates Historical exchange rates For exchange rates for currencies other than those listed by Norges Bank, see for example: Oanda.com The Universal Currency converter What sort of exchange rates does Norges Bank quote? Norges Bank's exchange rates are middle rates, i.e. the mid-point between buying and selling rates in the interbank market at a given time. Close to the time when the exchange rates are quoted, Norges Bank obtains a relevant exchange rate, for example, the number of Norwegian kroner for a euro, in the interbank market from banks and electronic trading systems, and sets the most accurate market rate possible at this point in time. This rate is reported electronically to the European Central Bank (ECB). In the same way, a number of European central banks report exchange rates for other currencies against the euro. In the case of currencies not covered by this reporting, Norges Bank obtains market rates from electronic information systems and/or banks. Because an exchange rate always expresses the relationship between two currencies, reporting from the central banks of other countries is used to calculate exchange rates in Norwegian accounting. When are the exchange rates published? The rates are usually set at 2.15 p.m. Exceptions are Wednesday before Maundy Thursday and New Year's Eve when the rates are set at 9.30 a.m. As from 2004, exchange rates will no longer be published on Christmas Eve. Norges Bank publishes the rates on electronic information systems as soon as the calculations have been completed. Can I trade on the basis of Norges Bank's exchange rates? The exchange rates are only intended to serve as an indication, and are not binding on Norges Bank or other banks. Norges Bank's exchange rates are often used as a reference and for historical comparisons. Norwegian banks may have different routines for updating exchange rates used in transactions with the public. Because exchange rates are constantly changing, banks' rates may differ from Norges Bank's rates. Moreover, banks' rates have margins for buying and selling, whereas Norges Bank's rates are pure middle rates. What are the foreign exchange reserves? The foreign exchange reserves are Norges Bank's holdings of financial assets in foreign currency which may be used in the conduct of monetary policy. Norges Bank also manages the Government Pension Fund's international assets (former Government Petroleum Fund) on behalf of the Ministry of Finance. Figures for the foreign exchange reserves What are claims on the IMF? The foreign exchange reserves and claims on the International Monetary Fund (IMF) together constitute Norges Bank's international reserves. Claims on the IMF consist of three components: SDR accounts (Special Drawing Rights), reserve positions in the IMF and loans to the IMF (Poverty Reduction and Growth Facility). The Executive Board of Norges Bank has delegated the responsibility of establishing guidelines for management of the SDR to the Governor. The Governor's guidelines for SDRs are as follows: "Pursuant to an agreement with the IMF, Norges Bank may make voluntary purchases and sales of SDRs. Holdings of SDRs shall remain at between SDR 200 and300 million under this arrangement. The Central Bank Governor may grant exemption from these limits." See also: Figures for the foreign exchange reserves Norges Bank's Annual Report, chapter 3 What are foreign exchange market interventions? Exchange market interventions are a central bank's purchase and sale of foreign currency using domestic currency. The purpose is to influence the exchange rate. Norges Bank is in a position to intervene in the foreign exchange market at short notice, but will not normally use interventions to influence the krone. Exchange market intervention, irrespective of whether currency is bought or sold, is not an appropriate instrument for influencing the krone over a longer period. However, interventions may be appropriate if the krone deviates substantially from the level that the Bank judges to be reasonable in relation to fundamentals, and if exchange rate developments weaken the prospect of achieving the inflation target. Interventions may also be appropriate in response to pronounced short-term fluctuations in the krone when liquidity in the foreign exchange market falls to a very low level. Norges Bank has not intervened in the foreign exchange market since January 1999. To contents >> Gold reserves How large are the gold reserves in Norges Bank? Norges Bank has sold the gold bars in the central bank's gold reserves, with the exception of seven gold bars reserved for exhibition purposes and 3 ½ tons of gold coins that were part of the "gold transport" to England in 1940. Gold is no longer included in Norges Bank's international reserves. When was Norges Bank's gold sold? Norges Bank sold 33.5 tons of gold bars in the first quarter of 2004. See press release Can I buy gold in Norges Bank? No, if you want to buy gold coins you must contact a coin dealer. If you want to invest in gold, you may contact one of the larger banks. What is the price of one kilo of gold? The price varies. If you visit Statistics Norway's website, you will find the price of gold under "Spot prices metals". Statistics Norway To contents >> Government Pension Fund - Global (former Petroleum Fund) How much has the Pension Fund earned/lost? Information about the size and return on the Fund is presented on our website. Pension Fund - size and return What is the forecast for the size of the Pension Fund? You will find the forcast on our website. Pension Fund - forecast What ethical rules apply to the Pension Fund's investments? You will find the answer to this question on The Ministry of Finance's website. Ethical Guidelines (Ministry of Finance) Where is the Pension Fund allowed to invest? This question is regulated by Section 6 of the Regulation on the Management of the Government Petroleum Fund. Regulation on the Management of the Government Petroleum Fund (Ministry of Finance) What strategy does the Pension Fund follow? The management strategy is laid down by the Norwegian Ministry of Finance. The Fund shall be managed in a prudent manner, with the objective of a high return for moderate risk, thereby helping to safeguard the basis for future welfare, including pensions. More >> Does the Pension Fund invest in private equities? No, the Fund invests only in listed equity instruments. Does the Pension Fund invest in hedge funds? No. Does the Pension Fund invest in real property? No. Can the Pension Fund invest in Norwegian equities? No, pursuant to Section 2 of the Regulation, the Fund shall be invested in financial instruments denominated in foreign currencies. Section 6 stipulates the countries in which the capital in the Fund may be invested. . Regulation on the Management of the Government Petroleum Fund (Ministry of Finance) Does the Pension Fund invest in emerging markets? Yes, the Fund invests in equity instruments listed on stock exchanges in Turkey, Brazil, Mexico, South Korea and Taiwan. The Fund also invests in fixed income instruments issued by borrowers in emerging markets provided that the issuer has a satisfactory credit rating and the instrument is denominated in an approved currency (e.g. USD or EUR). Which companies does the Pension Fund have equities in? Holdings at 31 December 2006 To contents >> Inflation What is inflation? Inflation is a sustained rise in the overall price level. Inflation is the same as a decline in the value of money, i.e. a certain amount of money buys you less than previously. Inflation is usually measured in terms of the rise in consumer prices, as measured in Statistics Norway's consumer price index. According to the Monetary Policy Regulation, the objective of monetary policy is annual consumer price inflation of approximately 2½ per cent over time. The consumer price index - Statistics Norway Regulation on monetary policy Which measure of inflation does Norges Bank emphasise? How does inflation affect my personal finances? The higher inflation becomes, the less your savings are worth. You get less for your money than before. High inflation also makes it more difficult to compare prices for different goods and services because prices are constantly being increased. When inflation is high, it tends to be variable. Variable inflation creates uncertainty regarding future income and expenses. In isolation, low and stable inflation means that there is less uncertainty associated with your financial decisions than if inflation is high. Price calculator Why is low and stable inflation an objective? Where can I find inflation figures? Statistics Norway prepares and publishes the official figures for inflation, the consumer price index (CPI). Substantial changes in the CPI may occur at times as a result of extraordinary fluctuations in certain product prices or changes in direct and indirect taxes. One version of the CPI adjusted for tax changes and excluding energy products, the CPI-ATE, is a measure of underlying price inflation. See Statistics Norway's website for more information about the CPI and different versions of the CPI. To contents >> Monetary policy What is monetary policy? Monetary policy in Norway is conducted by Norges Bank on behalf of the Government. Monetary policy is the component of economic policy that deals with influencing interest rates and liquidity in the market for NOK. The most important monetary policy instrument is the interest rate on banks' deposits in Norges Bank (the sight deposit rate). Who is responsible for monetary policy? The objective of monetary policy has been laid down by the Government and submitted to the Storting. The responsibility for the conduct of monetary policy is delegated to Norges Bank pursuant to the Norges Bank Act and appurtenant regulation. Norges Bank reports on the conduct of monetary policy in its Annual Report. The Norges Bank Act The Regulation on Monetary Policy Norges Bank's submission of 27 March 2001 to the Ministry of Finance The Annual Report What is the objective of monetary policy? The Government has defined an inflation target for monetary policy in Norway. The operational target is consumer price inflation of 2½ per cent over time. The Regulation on Monetary Policy Why is low and stable inflation an objective? High inflation means that storing money is expensive since the real value of the money is constantly falling. High inflation can also result in an unnecessary use of resources if many people spend a lot of time and energy on reducing the adverse effects of high inflation. There are also costs involved for businesses when they continually have to alter their prices. When inflation is high, it tends to be variable. Variable inflation creates uncertainty as households and firms become unsure of their future income and expenses. This makes it difficult to take the right decisions and gives rise to unsound investments, which in turn contribute to fluctuations in the economy. Uncertainty can also result in economic agents becoming less willing to enter into long-term contracts. Considerable resources can be used to hedge against substantial changes in prices. Substantial and unexpected changes in prices also result in an arbitrary redistribution of income and wealth, for example from small savers to professional agents, and from tenants to owners of real estate. In addition, high and variable inflation makes it difficult to differentiate between a change in prices for a good or service and a change in the overall price level. As a result, it is more difficult to determine which markets have shortages and which have excess supply. Making the right decisions becomes more demanding and may contribute to price instability in financial and property markets. Other costs of inflation are related to the taxation system. Many tax boundaries are set in nominal terms for one year at a time (surtax for example). High inflation implies rising real taxes through the year. Higher real taxes may result in a widening gap between behaviour that profits the national economy and behaviour that is profitable in terms of personal finances (rising tax wedges). In this sense, it may be said that low and stable inflation contributes to an efficient distribution of resources in a market economy. Inflation should not, however, fall to a level that is too low. This is partly because the structure of the economy evolves over time and rigidity in nominal terms may make it difficult to lower nominal prices and wages. With some inflation, relative wages can change without a fall in nominal prices and wages. Why do we want to avoid deflation? Deflation - a persistent decline in prices - often accompanies, and may amplify, an economic downturn. Deflation can in itself contribute to a fall in demand, thereby having a negative influence on the economy. For example, prospects of a fall in prices can result in the postponement of consumption and investment in expectation of even lower prices. Deflation can also result in an increase in the real value of debt and a decline in household demand. Corporate profitability can also deteriorate, leading to a rise in unemployment. Which measure of inflation does Norges Bank emphasise? In general, direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances shall not be taken into account. In real time it will always be difficult to determine which price movements are permanent and those which only have short-term effects on the CPI. There is no one indicator that provides a precise picture of underlying inflationary pressures in all situations. Different measures of underlying inflation are discussed in Monetary Policy Report. The Regulation on Monetary Policy What are the monetary policy instruments? Norges Bank influences economic developments by setting the interest rate on banks' deposits in Norges Bank. This interest rate, known as the sight deposit rate, is Norges Bank's key rate. In addition, Norges Bank can undertake foreign exchange market interventions. Foreign exchange market interventions are the buying or selling of NOK in the foreign exchange market in order to influence the krone exchange rate. The key rate What are foreign exchange market interventions? What is the key rate? The key rate is the central bank's main interest rate in the conduct of monetary policy. The key rate in Norway is the interest rate on banks' deposits in Norges Bank and is known as the sight deposit rate. The key rate Norges Bank's system for managing interest rates by Lars-Christian Kran and Grete Øwre in Economic Bulletin 2/2001 What is Norges Bank's discount rate? Norges Bank's discount rate was historically the rate banks had to pay for rediscounting bills of exchange in the central bank, and changes in the discount rate influenced the general level of interest rates in Norway. In 1986, the arrangement for the central bank's liquidity loans to commercial and savings banks, where the interest terms were linked to the discount rate, was reorganised because the discount rate eventually lost its status as a key rate as a result of credit market developments. The discount rate has therefore no longer any significance for monetary policy. The Executive Board decided that with effect from 1 January 1987, Norges Bank would no longer set a discount rate. Historical overview of Norges Bank's discount rate How does Norges Bank set the key rate? Norges Bank's Executive Board sets the key rate - i.e. the sight deposit rate - at regular times, normally every sixth week. The analyses and the monetary policy strategy presented in Norges Bank's Monetary Policy Report, together with assessments of price and cost developments and conditions in the money and foreign exchange markets, form a basis for monetary policy decisions. Norges Bank gives weight to both variability in inflation and variability in output and employment when setting interest rates (flexible inflation targeting). What is flexible inflation targeting? Flexible inflation targeting means that the central bank gives weight to variability in output and employment, as well as inflation. Under a strict inflation targeting regime, the central bank only focuses on inflation. The choice of horizon for monetary policy implicitly sheds light on monetary policy trade-offs. A central bank that places considerable emphasis on stable developments in the real economy will choose a long horizon. Monetary policy influences the economy with long and variable lags. Norges Bank sets the interest rate with a view to stabilising inflation close to the target in the medium term. The relevant horizon will depend on disturbances to which the economy is exposed, and how they will affect the path for inflation and the real economy ahead. How does a change in the interest rate affect the economy? It may be useful to distinguish between three channels through which monetary policy operates: the demand channel, the foreign exchange channel and the expectations channel. For more details on how interest rate changes affect the economy, see: "What are the effects of an interest rate change?" What is Norges Bank's Executive Board? Norges Bank's Executive Board has executive and advisory authority in connection with Norges Bank's core tasks of price stability, financial stability and added value in investment management. Matters laid down in legislation and matters of principle are dealt with by the Executive Board. The Executive Board consists of seven members, appointed by the King in Council. The Central Bank Governor and Deputy Central Bank Governor serve as chairman and deputy chairman, respectively, of the Executive Board. Employees have two members who participate in meetings when the Executive Board deals with administrative matters. The other five members are not employees of Norges Bank. By Royal Decree of 28 November 2003, new members were appointed to the Executive Board with effect from 1 January 2004. The Executive Board normally meets every third week. As a rule, every other meeting is reserved for matters relating to monetary policy and the use of monetary policy instruments only. The dates of monetary policy meetings are announced in advance. The Executive Board Monetary policy meetings Are the minutes of the Executive Board meetings published? The minutes of the Executive Board meetings are not published. On the day of a monetary policy meeting, a press release and an account of the assessments underlying the Executive Board's interest rate decision are issued at 2 p.m. A press conference is held forty-five minutes later, where the Governor or Deputy Governor of Norges Bank states the reasons for the decision and answers questions. The press conference is webcast (in Norwegian) on our website. As from 1 July 2004, the Executive Board's monetary policy strategy for the next four months is included in the Monetary Policy Report. Interest rate decisions What is the monetary policy strategy? The main features of the analysis in the Monetary Policy Report are presented to the Executive Board for discussion at a meeting about two weeks before the report is published. On the basis of the analysis and discussion, the Executive Board assesses the consequences for future interest rate developments and adopts a monetary policy strategy, including alternative strategies. The decision to adopt a monetary policy strategy is made on the same day as the report is published. The strategy applies for the period up to the next report and is presented at the end of Section 1 in the report. The Executive Board's strategy To contents >> Notes and coins Do old banknotes and coins have collector value? The collector value of some notes and coins is higher than the face value. Coin dealers can answer your questions about collector value and a number of catalogues provide an overview of such notes and coins. Det Norske Myntverket (Mint of Norway) has a list of links to coin dealers and numismatic organisations and associations. Det Norske Myntverket Can I use old banknotes and coins as a means of payment? The rules concerning the withdrawal of legal tender are specified in paragraph 15 of the Act on Norges Bank and the Monetary System (Norges Bank Act). The Act states that by issuing regulations, the Bank may withdraw from circulation notes of a certain series and denomination or certain coins. Notes and coins that are withdrawn from circulation cease to be legal tender one year after the proclamation, and the Bank is obliged to redeem notes and coins handed in within ten years of the expiry of the time-limit. This provision means that a note or coin that has been withdrawn will continue to be legal tender for one year after the proclamation. The note or coin will retain its value for another ten years, but during this period it will be up to the payee to decide whether payment may be settled by means of withdrawn notes or coins. The regulation concerning withdrawal is published in the Norwegian Legal Gazette and in the daily newspapers. When the ten-year limit has expired, a reminder will be published in the daily newspapers. What do I do with notes and coins that are no longer legal tender? When a note or coin is replaced by a new series, the old series of this denomination will be legal tender for one year from the proclamation date. After that and for the next ten years, the old series note or coin may be delivered to Norges Bank and exchanged for the new series. After the expiry of the ten-year limit, it is up to Norges Bank to decide whether there are reasonable grounds for redeeming notes and coins. The money must then be sent to Norges Bank as insured mail or delivered directly to Norges Bank in Oslo with an explanation of why the money has not been exchanged earlier. The owner must also supply his bank account number to enable us to deposit the value of the notes and coins into his account. How can I obtain unused notes and coins? Norges Bank is the banks' bank and does not provide services to the general public. Public services are provided by the banks. Private and business customers may obtain notes and coins and deposit their surplus cash holdings in banks. Banks deposit their surplus holdings to Norges Bank and obtain the notes and coins required to meet customer needs. New notes and coins are produced according to need, primarily to replace notes and coins that have been withdrawn from circulation. After that, production will be adjusted to the general public's use of cash as a means of settlement. You may contact your bank or a coin dealer if you want to purchase notes or coins of special quality. Some banks and coin dealers also sell special products such as coin sets. How can I determine whether a note is genuine? It is important that you learn to distinguish a counterfeit note from a genuine one. The most important security features are visible by holding the note up to the light. You can then see the watermark and the security thread which are part of all notes currently in circulation. On the 1000-krone, 500-krone, 200-krone and 100-krone notes, you will also see a broad, hologram foil stripe to the right of the portrait. When the note is held at different angles, different parts of the motif in the stripe will light up and change colour, even in poor lighting. The reverse of the banknotes contains a stripe that changes colour if you hold the note at different angles. In 2002, Norges Bank published a brochure describing how to recognize genuine banknotes. This brochure was distributed to all Norwegian households. You can also visit our website where you will find information about the security features on Norwegian banknotes. Security features To contents >> Norges Bank, Bankplassen 2, PB 1179 Sentrum, 0107 Oslo, tlf (+47) 22 31 60 00 Last updated 24.04.2007	Questions about: About Norges Bank Banking services Exchange rates Gold reserves Government Pension Fund - Global (formerly Petroleum Fund) Inflation Interest rates Monetary policy Notes and coins See also About this site Bank holidays
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