The average ownership share in a listed European company is now around 2.5 percent, which is twice the ownership share on other continents. Almost 2 percent of the fund is invested in Italy. The share invested in emerging markets is growing, as these markets develop. Over the past couple of years, we have started investing in Slovenia, Ghana and Mauritius, to provide three examples. At the end of 2014, 10 percent of the fund was invested in emerging markets. Still, close to 80 percent of the fund is invested in North America and Europe, where markets are largest and the most advanced. 4  BIS central bankers’ speeches  Through the fund’s investments in equities and bonds, we seek to ensure broad exposure to global equity and bond markets. In the management mandate, the Ministry of Finance has defined public stock and bond indices, which are used to benchmark our performance. These benchmarks are based on the FTSE and Barclays indices. These indices are constructed to meet the needs of a typical investor. As pointed out earlier, the oil fund is not a typical or average investor. Rather, the fund has certain distinguishing characteristics. The investment strategy seeks to exploit these characteristics to improve the overall balance between risk and return. Our portfolio will therefore deviate from the index along a number of different dimensions: •  First, the index providers adjust for so-called free float. The free float of a company represents the portion of a company’s shares that are readily available for trading.
Additional challenge #2: trying new and nontraditional policy responses when the economic stakes are enormous The second critical challenge is to take actions that respect both the feasibility of what monetary policy can accomplish and the enormous risks to the future prospects of the U.S. economy. For me, these risks are clear. It is painfully obvious that the large quantities of unused resources in the U.S. are an enormous waste. And it’s not just the current loss – over substantial periods of time, the skills of long-term unemployed workers decline, their reemployment prospects for similar jobs fade, and these reductions in skills have a lasting effect on the future growth potential of the economy. As I noted in the introduction, some argue that there currently are severe limits to what further accommodative monetary policies can do to address these risks. It is essential to delineate clear alternative scenarios in which this additional accommodation would be futile. Such scenarios clearly exist, but they are very dark and pessimistic interpretations of our current situation. I am personally much more optimistic and I don’t subscribe to this pessimistic view; but let me describe it as I understand it. Essentially, the hypothesis that limits aggressive policy actions assumes that the productive capabilities of the U.S. have declined markedly in recent years and that many workers who were productively employed just a few years ago are now essentially obsolete.