Norway’s finance ministry has determined that management of the nation’s $1 trillion sovereign wealth fund will not be spun off from the central bank.
This rejects a commission’s 2017 proposal that a newly created independent entity manage the Government Pension Fund Global (GPFG) that would no longer be subject to Norges Bank’s supervision.
“After a comprehensive assessment, the government recommends that Norges Bank continue to be the asset manager of the GPFG going forward,” said Finance Minister Siv Jensen.
This development came to light Friday in a finance ministry white paper to Stortinget, Norway’s parliament. The paper also suggested the government establish a monetary policy and financial stability committee for Norges Bank which could focus on fiscal and monetary policy, thus freeing up resources to oversee the sovereign wealth fund.
The ministry said the bank held a high level of trust locally and globally, and that it has maintained a good performance as both a central bank and asset manager. It also said that Norges Bank was fully aware of the fund’s economic policymaking reach.
When the proposal to divest the fund appeared last year, officials said that the responsibilities of the bank’s dual roles had expanded to the point where it began to put a strain on its board, senior management, and the organization itself. It said that dividing the duties to separate management firms would lighten the bank’s loads.
Jensen acknowledged that leaving the Government Pension Fund Global’s management with Norges Bank meant it will still face these issues, and that the ministry “must ensure that the governance structures are well adapted to these responsibilities.”
The ministry said that by moving the responsibility for these tasks to a separate committee within the bank, Norges Bank’s board can now devote “more time to the bank’s other tasks, in particular management of the GPFG.”
Øystein Olsen, the bank’s governor, said it had previously declared itself open to this idea, adding that it is “well equipped to continue its mission in both areas.”
The Norwegian government expects to produce a legislative proposal based on the white paper next spring.