Turbulence in credit markets--mortgage financing at home and abroad

Financial markets in different countries have become more closely interwoven over the past few years. New participants have appeared and new and more complex products to diversify risk have been introduced - also across national borders. Some of these products were put to the test for the first time during this autumn's turbulence in credit and money markets. Triggered by problems in the subprime mortgage market in the US, the turbulence quickly spread to other parts of the financial markets. In my remarks today, I will try to describe the driving forces behind these developments and the contagion effects on the Norwegian money and credit markets, with a discussion of the lessons to be drawn. [PUBLICATION ABSTRACT]