Friday, 8 August 2014

Money Supply Growth in Norway Hits 33 Month High, Financial Instability Lurks

Money supply growth in Norway, measured as the year on year percentage change in M2 excluding Money Market Fund Shares, hit 7.7% in June according to stats released by Statistics Norway today. This was the highest growth rate reported since September 2011.

The monetary inflation thus continues to be very high in the country even as DNB, Norway's biggest bank and financial corporation, and the banking system as a whole, continue to operate with very little capital relative to assets. In addition, Norwegian households are among the most indebted in the world compared to income. These developments are not sustainable and pose a serious threat to financial stability in the country. As the numbers show, very little appears to be done about it by Norges Bank, regulators and the government. I can only conclude that they all grossly underestimate the seriousness of the situation and worse yet, maybe they don't see nor understand the danger lurking right in front of them.