Norway: Financial Sector Assessment Program-Technical Note-Systemic Liquidity

August 12, 2020

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Norway: Financial Sector Assessment Program-Technical Note-Systemic Liquidity, (USA: International Monetary Fund, 2020) accessed December 21, 2024

Summary

Norwegian banks and other financial institutions rely heavily on capital markets for liquidity and risk management. Liquidity conditions in the Norwegian financial sector are affected by central bank operations and the lending and funding activities of financial institutions, both domestically and abroad. Nearly 40 percent of the funding of Norwegian banks is obtained from market sources, using commercial paper, covered bonds, and senior unsecured bonds issued both domestically and abroad. Correspondingly, money markets, foreign exchange (FX) swap markets and bond markets are crucial to the credit intermediation process and a dislocation in these markets—the inability of financial institutions to roll over, or obtain new, funding—could have significant consequences for financial stability. Against this background, this note analyzes core funding markets for Norwegian banks and assesses Norges Bank’s capacity to manage systemic liquidity conditions and counteract liquidity shocks in normal times and in times of stress.

Subject: Asset and liability management, Banking, Collateral, Covered bonds, Currency swaps, Financial institutions, Foreign exchange, Liquidity, Sovereign bonds

Keywords: Central bank, Collateral, Commercial paper, Covered bonds, CR, Cross holdings, Currency swaps, FX swap market, Global, Government bond, Government bond market, ISCR, Liquidity, Liquidity support, Market development, Mortgage loan, Secondary market, Sovereign bonds, Spot market, U.S. dollar

Publication Details

Pages:

43
Volume:

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DOI:

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Issue:

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Series:

Country Report No. 2020/264
Stock No:

1NOREA2020006
ISBN:

9781513553177
ISSN:

1934-7685

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