Norges Bank

Press release

Measures to curb the swings in the money market caused by the financial turbulence

The international financial turbulence has led to considerable fluctuations in short-term money market rates. Market rates have at times been considerably higher than central bank interest rates. Norwegian money market rates have also shown wide fluctuations, and particularly in the past week.

– Norges Bank has taken a series of measures to curb the swings in the Norwegian money market caused by the international turbulence, says Deputy Governor Jan F. Qvigstad.

Normally, Norges Bank issues short-term fixed rate loans (F-loans) to smooth fluctuations in market rates. Norges Bank has taken the following additional measures:

  • Banks will be offered F-loans with three-month maturities through auctions. The loans will be provided with effect from 1, 15 and 30 October. These loans mature at the beginning of next year.
  • Additional liquidity will be provided through F-loans when required.
  • USD 5 billion is being provided through currency swaps. The swap arrangement is authorised for a period of one week. The first arrangement was authorised from 18 to 25 September, and a new arrangement was authorised from 25 September to 2 October.
  • The Federal Reserve has authorised a credit line providing Norges Bank with access to US dollar funding of up to USD 5 billion against collateral in Norwegian kroner. Similar agreements have now been concluded between the Federal Reserve and the Reserve Bank of Australia, Danmarks Nationalbank and Sveriges Riksbank and previously between the Federal Reserve and the European Central Bank (ECB), the Bank of Japan, the Bank of England, the Swiss National Bank and the Bank of Canada. The agreements provide access to liquidity facilities totalling USD 277 billion.

Norges Bank’s liquidity management is designed to enable the Executive Board’s monetary policy decisions to feed through to short-term money market rates. Norges Bank manages liquidity in the banking system through its market operations. – The steps taken by Norges Bank have contributed to curbing the fluctuations and to more orderly conditions in the Norwegian money market. Norges Bank will monitor developments closely and assess the need for further action, says Deputy Governor Jan F. Qvigstad.


Press telephone: +47 21 49 09 30

Published 24 September 2008 14:00