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, members of Norges Bank's Executive Board and of the Monetary Policy and Financial Stability Committee ("the Committee").

The Ministry of Finance laid down "Supplementary provisions relating to impartiality etc. for members of Norges Bank's Executive Board and of the Monetary Policy and Financial Stability Committee (Impartiality Rules)" on 20 December 2019. The Impartiality Rules are included below as an appendix to these Ethical Principles.

The Impartiality Rules do not apply to the employee representatives on the Executive Board, but these board members are required to comply with the Ethical Principles for Employees of Norges Bank (laid down by the Executive Board on 19 October 2011). The Ethical Principles for Employees apply to the governor and the deputy governors as a supplement to the Impartiality Rules.

These Ethical Principles for Members of the Executive Board and of the Committee apply as a supplement to the Impartiality Rules. They are based on the principles pertaining to the Bank’s employees, but have been adjusted for the members of the Executive Board and of the Committee.

Purpose

The purpose of these Ethical Principles is to safeguard Norges Bank's reputation and maintain public trust in the Bank by ensuring that the external members of Norges Bank’s Executive Board and of the Committee perform their duties in an unbiased and independent manner and that they are loyal to Norges Bank. The Ethical Principles are designed to help create a common approach to ethical matters.

However, ethics are more than prescriptions and prohibitions laid down in laws and regulations. Ethics are also a matter of attitudes and the choices we make. It is neither possible nor desirable to regulate every conceivable issue that could arise. The aim of the Ethical Principles is to provide guidance 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.

For Norges Bank, the risk of corruption is primarily associated with a person using their position at the Bank to require, receive or accept undue advantage.

3. Scope

These Ethical Principles apply to external members of the Executive Board and of the Committee in the performance of their duties or when acting on behalf of Norges Bank.

4. General principles

All Norges Bank employees have a responsibility to contribute to safeguarding Norges Bank’s reputation. This means employees must not engage in illegal acts, including all forms of corruption, such as giving or receiving bribes or undue advantages. Furthermore, employees must not engage in fraud, embezzlement or other dereliction of duty. Employees must also act in an ethically responsible manner and have a high level of ethical awareness.

5. Duty of confidentiality

Anyone performing services or work for Norges Bank has a duty to prevent others from gaining access to or knowledge of any information that comes to their attention in the performance of their duties with regard to the business affairs of the Bank or others or the personal affairs of anyone ­­­­(cf. Section 5-2 of the Central Bank Act).

6. Personal trading

External members of the Executive Board and of the Committee may, for the purpose of managing their private assets or savings, carry out trades in financial instruments etc. Such management must be carried out in compliance with applicable laws and regulations (see in particular Sections 9 and 12 of the Impartiality Rules, which impose restrictions on trading etc. in fixed-income^[1] and foreign exchange products^[2] by external members).

The external members of the Executive Board or of the Committee 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^[3] or derivatives of such securities. The external members may trade in securities fund units, as long as securities funds in the financial sector hold a broadly diversified portfolio at the time of acquisition^[4].

The external members of the Committee may not trade in, establish, sell, redeem or refinance foreign exchange products, fixed-rate products or Norwegian financial instruments^[5] during the “quarantine period”, which runs from the date the members of the Committee first 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 date the external members of the Committee first have access to information about the Bank's next advice on the countercyclical capital buffer and until the decision based on the advice has been published. The general rules concerning the handling of inside information and other confidential information also apply outside the "quarantine period" (cf. Section 7). The external members of the Committee must in general show particular caution when trading for their own account in foreign exchange products, fixed-rate products or Norwegian financial instruments.

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 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^[6]. 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 an external member of the Executive Board or of the Committee 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.^[7]

The members of the Executive Board may receive information about investments made by Norges Bank Investment Management that are confidential or of a sensitive nature, for example in connection with company exclusions or unlisted investments. The external members of the Executive Board shall not under any circumstances use such information in their personal trading, to provide investment advice to others or pass on such information to unauthorised persons. Even though this information is not regarded as inside information, cf. Section 7, the external Executive Board members must in general show particular caution when trading in securities that are included in the Government Pension Fund Global’s investment universe.

The provisions in Section 6 also apply to personal trading conducted by external members of the Executive Board or of the Committee for the account of others.

7. Handling of inside information and other confidential information

When trading in financial instruments, the external members of the Executive Board and of the Committee must not misuse inside information^[8] or other confidential information that comes to their attention through their work for Norges Bank. Anyone possessing inside information or other confidential information:

• must not misuse this information to conduct trading in financial instruments, directly or indirectly, on their 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 misuse of inside information constitutes a statutory criminal offence.[9]

Particular reference is made to Sections 9 and 12 of the Impartiality Rules.

8. Handling of limitations on activity etc. and other limitations on interests

For the external members of the Executive Board, this is regulated in Section 8 of the Impartiality Rules, and in Sections 10 and 11 for the external members of the Committee.

Reference is also made to subsection 7-2 of the Executive Board’s and of the Committee's rules of procedure concerning impartiality.

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

External members of the Executive Board and of the Committee shall not accept 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.

Norges Bank shall not in general give gifts to business contacts. 

It is not permitted under any circumstances 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 as an external member of the Executive Board or of the Committee 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 external members of the Executive Board or of the Committee to accept invitations etc. in their official capacity

External members of the Executive Board and of the Committee 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 such travel, meetings, seminars etc. shall, as a main rule, be covered by Norges Bank.

When external members of the Executive Board or of the Committee 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 official capacity, or where the purpose is clearly not to obtain a contract with or special benefits from Norges Bank.

11. Lectures and communication on behalf of the Bank

In external communications, the governor speaks on behalf of the Executive Board and the Committee (cf. Section 4-5, fourth paragraph, of the Executive Board’s rules of procedure and Section 4-4, fourth paragraph, of the Committee's rules of procedure). To the extent agreed with the governor, external members of the Executive Board and of the Committee 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

The external members of the Executive Board and of the Committee have a responsibility to comply with the Impartiality Rules and these Ethical Principles.

The Executive Board’s secretariat shall establish a routine to ensure that members are reminded of the Impartiality Rules on an annual basis.

The Ministry of Finance has the ultimate responsibility for interpreting the Impartiality Rules. The Ministry of Finance may, when deemed unobjectionable, make exemptions from many of the provisions in the Impartiality Rules (see Section 13).

There is no requirement for regular reporting by the external members of the Executive Board and of the Committee pursuant to these Ethical Principles. Questions regarding these Ethical Principles may be directed to the Executive Board’s secretariat.

Appendix:

The Ministry of Finance’s decision on "Supplementary provisions relating to impartiality etc. for members of Norges Bank's Executive Board and of the Monetary Policy and Financial Stability Committee (Impartiality Rules)" of 20 December 2019.

Footnotes

[1] Typical fixed income products to which these limitations apply 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] See Section 2, second paragraph, of the "Forskrift om gjennomføring av opplysningsplikt etter § 5-3 i sentralbankloven" [Regulation concerning the implementation of the duty of disclosure under Section 5-3 of the Central Bank Act] (in Norwegian only).

[4] With respect to the external members of the Executive Board and of the Committee, 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 with a “narrow” portfolio in another sector.

[5] The prohibition on trading is not an impediment to trading during the “quarantine period” in units of which more than 95% are financial instruments in a currency other than Norwegian kroner. Nor is the prohibition on trading an impediment to pre-determined fixed payments through an existing savings instrument during the “quarantine period”.  

[6] See Section 3-3 (2) of the Securities Trading Act.

[7] 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 external members hold upon assuming office. Another example is the use of shareholders’ subscription rights assigned on the basis of their existing holdings.

[8] 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.

[9] The formal statutory basis in Norway for the prohibition of the misuse of inside information and other rules of conduct relating to financial instruments is provided by the Securities Trading Act.