Banks should be able to lend money to consumers and businesses in both upturns and downturns. In addition, payments for goods and services should be processed swiftly, safely and at low cost.

If banks fail to perform these tasks, the consequences for the entire economy could quickly become so wide-reaching that even the banking system would be exposed to large shocks. It is therefore important that banks are able to absorb losses and meet their current payment obligations.

To ensure this, banks must comply with strict regulatory requirements. Among these are the capital and liquidity (money that can be paid on short notice) requirements applying to banks in order to ensure that they can meet their current payment obligations.

The banks’ own payment systems are also required to be secure and efficient.

Responsibilities of the authorities

In Norway, the work on regulating and supervising the financial sector is divided between the Ministry of Finance, Finanstilsynet (Financial Supervisory Authority of Norway) and Norges Bank.

The Ministry of Finance has overriding responsibility and administers laws and regulations that regulate the financial sector. The Ministry also plays an important role in coordinating between the different authoritative bodies.

Finanstilsynet supervises each individual institution in the entire financial sector and checks whether they all meet the applicable requirements.

Norges Bank oversees the financial system to gather information on developments that threaten the system as a whole. As bankers’ bank, the central bank also plays an important role in managing banking sector liquidity and can provide or withdraw liquidity when necessary.

As the ultimate settlement bank in the Norwegian payment system, Norges Bank also has a particular responsibility for supervising the interbank settlement system.