Consultation response to the report of the Central Bank Law Commission
Norges Bank has today submitted its consultation response on Official Norwegian Reports NOU 2017/13 New central bank act.
"The Central Bank Law Commission's report is a good starting point for further assessment of an appropriate governance structure for Norges Bank and the management of the Government Pension Fund Global (GPFG). Norges Bank's consultation process has been fruitful with solid input from the entire organisation to help form the basis for the Executive Board's deliberations and assessments," says Governor Øystein Olsen.
Norges Bank's consultation response is divided into three sections. Section 1 discusses the Commission's recommendations on the organisation of Norges Bank and the GPFG. Section 2 comments on the proposal on a new central bank act, while Section 3 comments on the new act on Norwegian Government Investment Management and proposed amendments to the Government Pension Fund Act.
"Norges Bank is well equipped to manage the GPFG and perform central banking task also going forward. The establishment of a committee for monetary policy and financial stability will, in the event the fund remains with the central bank, reduce the Executive Board's scope of responsibilities," says the Governor.
At the same time, the Executive Board recognises that developments suggest the need for a closer examination of aspects of the current organisation and governance model. If the investment strategy comes to include more unlisted asset classes and the manager is given broader responsibility for investment strategy and ethical assessments, this could count in favour of the management of the fund being organised outside the central bank.
"The Executive Board is of the view that the question of the fund's organisation should be assessed in conjunction with the future development of the investment strategy," says the Governor.
The arguments for establishing a committee for monetary policy and financial stability are weaker if the GPFG is separated from Norges Bank. A board composition approximately the same as today, but where the competence of board members is more focused on central banking could then function effectively. With the governor as chair, it is natural for the Supervisory Council to continue to conduct oversight of the board.
"Norges Bank supports most of the proposals in the draft central bank act, in particular the provisions on the central bank's purpose, functions and relationship to the authorities," says the Governor.