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, with later amendments. The Impartiality Rules are included below as an appendix to these Ethical Principles.

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.

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, with later amendments) and underlying regulations in the operating areas.

1 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 principles are intended to help avoid conflicts of interest relating to the impartiality of the external members or other conflicts of interest, and avoiding any doubt with regard to members' integrity and independence in the performance of their duties. The Ethical Principles are designed to help create a common approach to ethical matters.

The external members of the Executive Board or the Committee must not take on positions or financial ties or trade in financial instruments that would be likely to damage Norges Bank’s reputation or compromise public trust in Norges Bank.

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, harassment or bullying of its own employees or others involved in Norges Bank’s activities.

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 the purpose in Section 1 and the general provision to exercise due care in Section 1a of the Impartiality Rules. For the external members of the Executive Board the limitation on personal trading in the Impartiality Rules extends to trading, for his or her own account or for the account of another party, in financial instruments, fixed-income^[1] and foreign exchange products^[2].

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 “quarantine period” is extended until the decision on the countercyclical capital buffer is published in the instances where this occurs after the publication of a policy rate decision.  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 (cf Section 1a in the Impartiality rules).

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 (cf. Section 1a in the Impartiality Rules).

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 must not^[9]:

• engage or attempt to engage in insider dealing^[10]
• recommend that another person engage in insider dealing or induce another person to engage in insider dealings, or
• unlawfully disclose inside information, ie not as a part of the normal exercise of an employment, a profession or duties.

The misuse of inside information constitutes a statutory criminal offence.^[11]

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 7 of the Impartiality Rules, and in Sections 9 and 10 for the external members of the Committee (cf Section 1a).

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 or others when performing work or service for Norges 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 or potential business contacts. 

It is not permitted under any circumstances to offer or in any other way favour Norges Bank’s business contacts or potential business contacts with any kind of undue advantage 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, in special cases, make exemptions from the provisions in the Impartiality Rules (see Section 11).

There is no requirement for regular reporting by the external members of the Executive Board and of the Committee pursuant to these Ethical Principles. According to Section 7 and 9 in the Impartiality Rules, The Ministry of Finance must approve any new positions and professional connections during the appointment period, including changes of a financial nature that could be of importance in a compatibility assessment (cf Section 1 and 1a).

Questions regarding these Ethical Principles may be directed to the Executive Board’s secretariat or to the General Councel.

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 with later amendments^[12].

 

Footnoes

^[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 information of a precise nature, which has not been made public, relating directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the prices of related derivative financial instruments. The term is further defined in Article 7 of the Market Abuse Regulation (MAR).

^[9] See Articles 10 and 14 in MAR.

^[10] Insider dealing arises where a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, financial instruments to which that information relates. See Article 8 of MAR.

^[11] 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 and MAR, as implemented in Norwegian law.

^[12]Only available in Norwegian