| Abstract |
This article guides through the measures implemented in Norway in order to dampen negative effects stemming from the financial crisis. We also discuss some features of the Norwegian money market and the liquidity system in Norway. From the point of view of central banks, the widening gap between money market rates and the key policy rate has been one disturbing element of the financial crises. We develop a simple model, which illustrates how developments in forward exchange premiums can provide insight as to why money market premiums differ across currencies. The model shows that the excess supply of term liquidity in dollar relative to the excess supply of term liquidity in other currencies has an impact on the domestic money market premium relative to that on USD. |
