New measures to secure the provision of credit

The Government is proposing two new measures to ease access to funding for businesses and households in Norway. With the establishment of a NOK 50 billion fund to boost the banks’ capital, the banking system will be in a stronger position to continue to provide lending services to the public. And the proposal for a NOK 50 billion bond fund to improve liquidity in the bond market will be another positive contribution to meet the financing needs of Norwegian companies. (08.02.2009)

The Government is proposing two new measures to ease access to funding for businesses and households in Norway. With the establishment of a NOK 50 billion fund to boost the banks’ capital, the banking system will be in a stronger position to continue to provide lending services to the public. And the proposal for a NOK 50 billion bond fund to improve liquidity in the bond market will be another positive contribution to meet the financing needs of Norwegian companies.

As part of broader efforts to boost confidence and dampen the negative effects of the financial crisis on the provision of credit, the Government is presenting a proposal to establish two funds: a fund to offer capital to sound banks and a fund to invest in corporate bonds alongside other investors.

In drafting these measures, particular emphasis was placed on the following considerations:

  • The banking system has a particularly important role in the provision of credit in today’s economy.
  • Risk assessment and lending should primarily be carried out by the regular, private sector credit institutions.
  • Government efforts should be aimed at securing financial stability and ensuring well-functioning markets.
  • It is important to avoid creating wrong incentives and to address moral hazard issues in the financial sector.
  • Public funds should be prudently managed, and financial investments should earn returns commensurate with the risk taken.
  • The measures should be temporary.

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Fact sheets:
The State Finance Fund – core capital to the banks
The State Bond Fund to invest in the corporate bond market
Credit measures – financing and authorisation to borrow