Ida Wolden Bache: Economic perspectives

Annual address by Ms Ida Wolden Bache, Governor of Norges Bank (Central Bank of Norway), to the Supervisory Council of Norges Bank and invited guests, Oslo, 15 February 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Data accompanying the speech

Along one of the major ring roads around Oslo stands an empty building. On its façade the Norwegian word for trust (TILLIT) shines towards us. While the building has been empty for almost 20 years, the word is certainly not. It is replete with meaning and implications. Trust forms the leitmotif of my speech this evening – why trust is important and how we can preserve it.

A well-functioning democracy is built on trust – political trust and institutional trust. International comparisons show that Norway enjoys a high degree of trust both between its people and between its people and government. We are privileged to live in a country with such a high level of trust capital. Perhaps trust is the most important capital we have, which we also want to pass on to future generations.

Money is also grounded in trust. For thousands of years, economic life has involved various forms of money. Money makes the exchange of goods and services more efficient. What we are willing to accept as money has naturally evolved over time from the world's first known currency, cowrie shells, to today's electronic money. For money to function as a medium of exchange, there must be trust in its value.

This year we are celebrating the 750th anniversary of the Code of Magnus Lagabøte. The King was also a reformer of the monetary system. He took seriously the importance of trust in the value of money. The reforms he implemented have come to stand as a watershed moment in Norwegian monetary history.

In his time, the royal power was the guarantor of the value of money. Today, most governments have delegated the conduct of monetary policy to the central bank. By giving the central bank the task of ensuring monetary stability and sufficient autonomy, the promise of preserving the value of money becomes more credible. But that promise must be followed by action. In today's situation, that means bringing inflation back to target.