Norges Bank’s Surveillance of Financial Stability

This article presents the primary elements of the analyses performed by Norges Bank to monitor stability in the financial system. Section 1 explains briefly why Norges Bank performs these analyses. Section 2 examines financial institutions’ risk exposure and Norges Bank’s methods for monitoring trends that can shed light on developments in risk exposure. Section 3 presents the Bank’s analyses of developments in financial institutions

Change in the Organisation of the Supply of Notes and Coins – Establishment of the Limited Company Norsk Kontantservice AS (NOKAS)

During the past two years, major changes have been made in the organisation of the supply of notes and coins in Norway. The changes are a result of developments in the distribution network since the late 1980s, which have included modifications in the transport system and new delivery procedures. As a result, Norges Bank was increasingly performing commercial services for banks in connection with activities relating to Norges Bank’s responsibility for issuing notes and coins. At the same time, the activities of the Bank’s regional branches increasingly concentrated on the distribution and processing of notes and coins. In due course, it proved necessary to distinguish more clearly between central bank tasks ensuing from Norges Bank’s statutory responsibility for issuing notes and coins, and operations of a more commercial nature. As a result, a separate company was established in the summer of 2001 – Norsk Kontantservice AS (NOKAS), with Norges Bank and private banks as owners. This company performs both central bank tasks for Norges Bank and other cash processing services for private banks. This article provides a more detailed description of the changes and the reasons for these changes

Model for Analysing Credit Risk in the Enterprise Sector

When banks’ overall risk is evaluated, their credit risk exposure to the enterprise sector is a key element. In analyses of banks’ credit risk in the enterprise sector, both a macroeconomic and a business economics approach are generally applied, the latter based on corporate earnings, liquidity and financial strength. In this article, we present a new model that predicts enterprise-specific bankruptcy probabilities. On the basis of these probabilities, both aggregate bankruptcy probabilities and the magnitude of accompanying losses for banks can be estimated

Changes in Norges Bank’s Role and Activities in Cash Supply and Distribution

This Staff Memo is a slightly adjusted version of an article published in Norwegian in 2010. Due to great interest of colleagues from other central banks, we present the changes in the Norwegian cash cycle in English.Norges Bank has made considerable changes in its role and activities in cash supply and distribution since the turn of the century, with the aim of enhancing efficiency in cash distribution and the payment system as a whole. Norges Bank’s cash distribution responsibilities have been clarified, and the Bank has assumed a defined role as wholesaler. In addition, Norges Bank has outsourced note and coin processing services to a considerable extent compared with other central banks and currently relies on purchasing these services from external operators. This article presents the changes and reviews the assessments and reasoning behind the choices made in the light of Norges Bank’s responsibilities. The final section examines the consequences of the changes. The overall assessment is that the changes have increased efficiency in the cash supply and enhanced efficiency in the payment system as a whole

Norges Bank's Role in Cash Distribution

During the past few years, Norges Bank has made major changes in its cash operations. These changes have been designed to adjust and clarify the division of responsibility between the various parties involved in cash distribution. Tasks have been allocated in line with this purpose. Norges Bank’s overriding consideration has been to adapt the central bank’s cash policy so as to increase the efficiency of the payment system. In practice, this involved changes which have been implemented in three stages. 1) discontinuation of commercial services 2) changes in terms for banks’ cash deposits in and withdrawals from Norges Bank and 3) changes in the depot structure and introduction of compensation in the form of interest for cash held in banks’ own depots. The result of these changes is that the central bank has assumed a more clearly defined role as wholesaler and banks have taken more responsibility for the redistribution of cash amongst themselves. Moreover, Norges Bank has assessed the organisation of the services and tasks for which the central bank is responsible. The practical consequence of these assessments is that Norges Bank’s cash operations are based largely on outsourcing. This article presents key assessments of the role Norges Bank wishes to have in cash distribution, as well as information about the changes that have been implemented in the period 2001-2005

Change in the Organisation of the Supply of Notes and Coins – Establishment of the Limited Company Norsk Kontantservice AS (NOKAS)

During the past two years, major changes have been made in the organisation of the supply of notes and coins in Norway. The changes are a result of developments in the distribution network since the late 1980s, which have included modifications in the transport system and new delivery procedures. As a result, Norges Bank was increasingly performing commercial services for banks in connection with activities relating to Norges Bank’s responsibility for issuing notes and coins. At the same time, the activities of the Bank’s regional branches increasingly concentrated on the distribution and processing of notes and coins. In due course, it proved necessary to distinguish more clearly between central bank tasks ensuing from Norges Bank’s statutory responsibility for issuing notes and coins, and operations of a more commercial nature. As a result, a separate company was established in the summer of 2001 – Norsk Kontantservice AS (NOKAS), with Norges Bank and private banks as owners. This company performs both central bank tasks for Norges Bank and other cash processing services for private banks. This article provides a more detailed description of the changes and the reasons for these changes