The true value of the bond portfolio will, at the very latest, be realised when the loans are repaid. More than 90 percent of the fixed income portfolio is rated A or better. Even though rating agencies do not always prove to have the best evaluations, this still illustrates our conservative investment strategy. The Fund is a long-term savings plan and capable of riding out large swings in the markets. This is the very foundation of the investment strategy with its high allocation to equities. Our ability to adhere to this strategy in a critical phase – even if this should persist for some time – is crucial if the Fund is to deliver the returns we expect in the longer term. We need to attach importance to the real value of equity investments and safeguard assets by spreading the Fund’s investments. Norges Bank therefore supports the strategy that the government has chosen for the Fund. Under the Fund’s strategy, more equities will be bought when equity prices fall and fewer when they rise. The Fund therefore purchased a large volume of equities from 2001 to 2003 and is buying a considerable volume now. Of the equities now owned by the Fund, 40 per cent were purchased last year when prices were moving down. As a result, ownership in the business sector in the US, Europe and Asia has increased – in companies’ human capital, in their machinery and equipment, brands and organisation.
The senior management of the Central Bank protested vehemently against the separation, and I would like to quote from a letter on the topic, sent by the Board of Governors to the then Minister of Commerce in early 1998: “The Board of Governors is of the opinion that there are overwhelming arguments in favour of the Central Bank’s continued supervision of the activities of deposit institutions, other credit institutions, and securities market entities. The Board of Governors wishes to emphasise in particular that such supervision is a normal and appropriate part of the Central Bank’s activities. This supervisory role benefits just as much from its partnership with the Central Bank as various other Bank activities do from partnering with banking supervision.” If there is any single factor that foreign experts have identified as the main cause of the 2008 financial crisis, it is the fact that responsibility for and supervision of the financial system were spread across a large number of ministries and institutions, with the result that no single party had an all-encompassing overview, no single party was actually accountable, no single party had adequate power, and no single party had enough muscle to intervene. Actually, in other countries where financial supervision had previously been hived off from the central bank, the two functions were reunited after the 2008 crisis. The Ministry of Commerce was united with the Ministry of Finance for the same reason: to enhance the punching power of financial and economic administration.