Norges Bank

Ethical Principles for External Members of Norges Bank's Executive Board

Laid down by the Executive Board on 18 June 2014. Last amended on 15 August 2018.

Background

Norges Bank, as central bank and manager of the Government Pension Fund Global, is entrusted with considerable authority and confidence. It is important to safeguard the Bank's reputation and ensure a high level of ethical awareness and integrity among all employees and Executive Board members.

The Ministry of Finance laid down a regulation relating to impartiality for Norges Bank's Executive Board on 7 August 2000. The regulation pertains to members of the Executive Board and alternates, including employee representatives. The regulation is included in an appendix to these ethical principles.

For the governor, deputy governor and employee representatives, Ethical Principles for Employees of Norges Bank (laid down by the Executive Board on 19 October 2011) are applicable as a supplement to the regulation.

These Ethical Principles for External Members of the Executive Board are applicable as a supplement to the regulation. They are based on the principles pertaining to the Bank's employees, but have been specially adapted for the external members of the Executive Board.

1. Purpose

The purpose of the Ethical Principles for External Members of the Executive Board is to safeguard the reputation and the public's confidence in Norges Bank by ensuring that the external members of Norges Bank's Executive Board perform their duties in an unbiased and independent manner and that they are loyal to Norges Bank. The Ethical Principles shall help create a common attitude to ethical matters among the external members of Norges Bank's Executive Board.

However, ethics involve more than mandates and prohibitions laid down in laws and regulations. Ethics is also about attitudes and the choices we make. It is neither possible nor desirable to regulate every conceivable matter that may arise. The aim of the Ethical Principles is to provide a guide in dealing with such matters.

2. Business conduct

Norges Bank shall maintain a high level of ethical standards in the conduct of its activities, respect human rights, act in a socially responsible manner and comply with current laws and regulations.

Norges Bank does not accept any form of discrimination.

Norges Bank does not accept any form of corruption, whether involving employees, the Bank's contractors or other contractual or third parties. Corruption erodes ethical and moral values and is a threat to the rule of law, fundamental human rights and democracy. Furthermore, corruption creates discrimination, is an impediment to social justice and undermines fair competition.
The risk of corruption in Norges Bank is primarily associated with a person using their position at the Bank to require, receive or accept undue advantage.

3. Scope

These Ethical Principles are applicable to external members of the Executive Board and external alternates to the Executive Board in their performance of their duties as Executive Board members or when acting on behalf of Norges Bank.

4. General principles

All external members of the Executive Board have a responsibility to contribute to the safeguarding of Norges Bank's reputation. This means external members are prohibited from engaging in illegal acts, including all forms of corruption, such as giving or receiving bribes or undue advantages. Furthermore, all external members of the Executive Board are prohibited from engaging in fraud, embezzlement or other dereliction of duty. External members must also act in an ethically responsible manner and have a high level of ethical awareness.

5. Duty of confidentiality

All who work or perform a service for Norges Bank have a duty to prevent others from gaining access to, or knowledge of, any matter that they may become aware of in the performance of their duties regarding the business affairs of the Bank or of other parties, or of the private circumstances of any person (cf. Section 12 of the Norges Bank Act).

6. Personal trading

External members of the Executive Board may, for the purpose of managing their private assets or savings, carry out trades in shares, bonds and units in securities funds. Such management must be carried out in compliance with applicable laws and regulations (see in particular Section 8 of the regulation relating to impartiality for Norges Bank's Executive Board, which imposes restrictions on trading etc. in fixed-income[1] and foreign exchange products[2] by external Executive Board members).

External Executive Board members may not trade in, establish, redeem or refinance foreign exchange products, fixed-rate products or Norwegian financial instruments[3] during the "quarantine period", which runs from the first time they have access to information about the next interest rate decision until the interest rate decision has been published. The prohibition on trading also applies as from the first time external Executive Board members have access to information about the next advice on the countercyclical capital buffer and until the decision based on the advice has been published.

External Executive Board members may not acquire or dispose of Norwegian transferable securities (cf. the definition in Chapter 2 of the Securities Trading Act) issued by financial sector enterprises or derivatives of such securities. External Executive Board members may trade in securities fund units, but securities funds in the financial sector must nonetheless hold a broadly diversified portfolio at the time of acquisition[4].

The prohibition on trading referred to in the second and third paragraph does not apply to transactions that do not involve an independent decision by the external Executive Board member, such as in the case of inheritance, a gift, administration of an estate, stock redemptions in connection with write-downs, forced redemption, forced sales, involuntary conversion, bond redemption or similar. The same applies to corporate events such as mergers, demergers, stock splits and reverse stock splits, "forced" distribution of dividend shares and similar. Nor does the prohibition on trading prevent the normal exercise of any option or forward/futures contracts previously entered into upon the expiry of such contracts[5]. The same applies to bonus shares issued under a pre-existing agreement or as a result of a unilateral decision by a company as compensation for work or services performed for the company where the external Executive Board member is employed or is a board member.

The General Counsel can in other cases grant exemptions from the provisions in the second and third paragraph, provided that such exemptions are not deemed inadvisable[6].

The external members of the Executive Board may receive information about investments made by Norges Bank Investment Management that are confidential or of a sensitive nature. Even though this information is not regarded as inside information, cf. Section 7, the external Executive Board members must show due care when trading in securities that are included in the Government Pension Fund Global's investment universe.

The provisions of this section also apply to personal trading conducted by external Executive Board members for the account of others.

7. Handling of inside information and other confidential company information

When trading in financial instruments, external members of the Executive Board must not misuse inside information[7] or other confidential information they acquire knowledge of through their work for Norges Bank. Anyone possessing inside information:

  • must not misuse this information to conduct trading in financial instruments, directly or indirectly, for own or others' account, or encourage others to engage in such trading
  • must not disclose such information to unauthorised persons
  • must show due care so that inside information does not come into the possession of unauthorised persons or is misused
  • must not provide advice on trading in the specified financial instruments.

The abuse of inside information constitutes a statutory criminal offence.[8]

Particular reference is made to Section 8 of the regulation relating to impartiality for Norges Bank's Executive Board.

8. Handling of conflicts of interest

External members of the Executive Board should refrain from any actions that may create a conflict between private interests and the interests they are to protect as members of Norges Bank's Executive Board.

External members of the Executive Board should seek the necessary clarification from the Ministry of Finance if, after appointment to the Executive Board, doubts are raised concerning the limitations on a member's activities and interests etc., under the regulation relating to impartiality for Norges Bank's Executive Board. See in particular the limitations pursuant to Sections 6 and 7 of the regulation.

Reference is also made to Section 25 of the Executive Board's rules of procedure concerning impartiality.

9. Gifts and personal benefits from/to Norges Bank's business contacts

External members of the Executive Board shall refrain from receiving gifts or personal benefits, for themselves or for others, from Norges Bank's business contacts when acting on behalf of the Bank. "Business contacts" are defined as external contacts maintained by Norges Bank in the conduct of its activities.

In general, Norges Bank shall not give any gifts to business contacts.

Under no circumstances are external members of the Executive Board permitted to offer, or in any other way favour, Norges Bank's business contacts with any kind of benefit in order to obtain (including where the action may be perceived as an attempt to obtain) contracts or personal benefits, or in any way to exploit their position on the Executive Board of Norges Bank to obtain such contracts or benefits.

The prohibitions in this section apply irrespective of the financial value of the benefit and even if the giving of the benefit is deemed customary in the relevant social milieu, country or culture.

10. Permission for members of the Executive Board to accept invitations etc. in their official capacity

External members of the Executive Board may, as part of Norges Bank's activities, participate at external seminars, meetings and events that are relevant to Norges Bank's activities and where participation is in the interests of Norges Bank or of the Executive Board.

Costs related to travel, meetings, seminars etc. shall, as a main rule, be covered by Norges Bank.

When external members of the Executive Board act on behalf of Norges Bank, they may only accept invitations to meals from Norges Bank's business contacts if the meal naturally forms part of a meeting or other type of event members attend in their capacity as Executive Board member, or where the purpose is clearly not to obtain a contract with or special benefits from Norges Bank.

11. Lectures and educational activities on behalf of the Bank

In external communications, the governor speaks on behalf of the Executive Board (cf. Section 22, third paragraph, of the Executive Board's rules of procedure). To the extent agreed with the governor, external members of the Executive Board may participate and represent Norges Bank in various external gatherings and contribute by giving lectures etc. regarding or relating to Norges Bank's activities.

12. Reporting and compliance

External members of the Executive Board have a responsibility to comply with the regulation relating to impartiality for Norges Bank's Executive Board and these Ethical Principles.

With regard to the regulation relating to impartiality for Norges Bank's Executive Board, the Executive Board's secretariat shall establish a routine to ensure that members are reminded of the regulation on an annual basis. The routine shall recommend that members of the Executive Board report on compliance with the regulation.

The Ministry of Finance has the ultimate responsibility for interpreting the regulation relating to impartiality. The Ministry of Finance may, when deemed unobjectionable, make exemptions from the rules in the regulation (see Section 11 of the regulation).

There is no requirement for ongoing reporting from members of the Executive Board pursuant to these Ethical Principles. Questions regarding the rules may be directed to the Executive Board's secretariat.

Appendix: The Ministry of Finance's Regulation No. 809 of 7 August 2000 relating to the relationship of members of Norges Bank's Executive Board with other credit institutions and enterprises (Impartiality Regulation).

Footnotes:

  1. Typical fixed-income products covered by these limitations are fixed-rate products such as fixed-rate deposits and fixed-rate loans.
  2. In these ethical principles, the term foreign exchange products has the same meaning as in the "Supplementary ethical rules of conduct for employees of Norges Bank Central Banking Operations" laid down by the Governor of Norges Bank. This means that loans in foreign currency are a foreign exchange product, as are currency trades where the primary underlying purpose is currency or interest rate speculation. Typical examples of this are purchases of currency to hold as deposits and the like and that are not intended to fund concrete purchases or be "spent" in some other way. Foreign exchange products do not include necessary currency exchange in connection with travel, studies abroad or relocation between countries using different currencies, buying or selling holiday homes or valuables abroad, online shopping in foreign currency, covering current payment obligations or investment returns in foreign currency.
  3. The prohibition on trading is not an impediment to trading, during the "quarantine period", in units in securities funds issued in Norway that only contain foreign securities. Nor is the prohibition an impediment to receiving a pre-determined fixed return on an existing savings instrument during the "quarantine period".
  4. This corresponds to the rule in the impartiality regulation pertaining to the governor and deputy governors of Norges Bank. With respect to the external members of the Executive Board, the rule is intended to prevent trading in securities funds with a portfolio that is primarily limited to Norwegian securities in the financial sector. Thus the rule is not an impediment to trading in units in securities funds that have a "narrow" portfolio in another sector.
  5. See Section 3-3 (2) of the Securities Trading Act.
  6. Examples of exemptions that are not deemed inadvisable pursuant to the second or third paragraph are the sale of issued subscription rights before they expire or become worthless, or the disposal of securities acquired through inheritance, as a gift, or in the administration of an estate, or Norwegian transferable securities that members of the Executive Board hold upon assuming office.
  7. Inside information is specific information that could have a significant effect on the price of financial instruments and that is not available to the public or generally known in the market. The full definition appears in the Securities Trading Act.
  8. The formal statutory basis in Norway for the prohibition against the abuse of inside information and other rules of conduct relating to financial instruments is provided by the Securities Trading Act.