This traditional cost / benefit analysis seems less and less able, however, to account for the true behavior of reserve holders. During the crisis, foreign exchange reserves were used as a tool for internal – as well as external – financial stability. National Central Banks, especially in Latin America, acted as dollar lenders of last resort to their domestic banks. (Obstfeld et al. 2009). This function will develop in the future. Financial openness and integration means that domestic banks will engage more and more into foreign currency operations. In turn, the expansion of their international balance sheets will increase the potential demand for liquidity support in case of shocks. This trend should be accepted as a normal consequence of open  4  BIS Review 120/2010  capital markets and international banking, together with the predominance of a very limited number of currencies in international finance. It is bound to impact the demand for reserves and increase the need for self insurance. One characteristic of liquidity shocks is that the net demand for liquidity may become almost infinite. Ex ante, no buffer is ever big enough. No amount of reserves will fully protect a financially open economy against a systemic shock. It is noticeable that countries, such as Korea, which possessed very important amounts of reserves prior to the crisis and has a flexible exchange rate regime, nevertheless felt the need to enter into currency swaps with the Federal Reserve. In a sense, countries face the same dilemma as private institutions.
Under the strategy plan for 2020-2022, the Executive Board will continue to use external managers in markets and market segments where local knowledge is particularly relevant. After the Storting had discussed the white paper on the GPFG in 2019, the Ministry gave Norges Bank permission to invest in unlisted infrastructure for renewable energy. This is reflected in the strategy for the next three years adopted by the Executive Board. The Bank will assess each investment in relation to risk and return. The management of the GPFG is required to be cost-effective. Norges Bank aims to keep total 1/2  BIS central bankers' speeches  internal management costs in the period 2020-2022 below 0.05 percent of assets under management. In recent years, the number of Norges Bank Investment Management (NBIM) employees has been reduced and administrative support functions across the Bank are being streamlined. The Executive Board will continue to monitor costs closely. In the course of 2020, the Executive Board has strengthened the Bank's work as advisor to the Ministry, in accordance with our new mandate. In this year's white paper, the Ministry proposes changes in the composition of the equity benchmark index. The equity allocation to Europe will be reduced somewhat over time, and the allocation to North America will be correspondingly increased. This is in line with Norges Bank's advice. Norges Bank works systematically to set principles, exercise ownership rights and invest responsibly. Our work on responsible investment underpins the objective of the highest possible return.