The aim is to establish a chain of instruments that can be used in the work on responsible investing. So far, our nation has earned a solid return on its financial assets. The cumulative return on the GPFG since its inception amounts to over NOK 2 000 billion. This is equivalent to about a third of total GPFG capital at the end of 2014. Our return measure includes both capital gains and direct cash flows, which comprise dividend and interest income. Equity prices are volatile. Dividend and interest income is more reliable. Given the large size of the GPFG, this cash flow has become substantial and is higher than the revenues from major exports such as fish and metals (see Chart 11). Over a third of the GPFG is invested in bonds. The real interest rate on high-grade government bonds is the starting point for calculating the rate of return. In recent years, those yields have been close to zero (see Chart 12). Low bond yields reflect global economic conditions: Governments, businesses and households are seeking to save more, while demand for safe investments has increased. Central banks’ substantial asset purchases are pushing in the same direction. Low yields may also reflect modest expectations of economic growth further ahead. There is no return without risk. The GPFG features a very long investment horizon and a sizeable capacity to bear short-term risk. This is why the chosen allocation to equities is relatively high. It is also the reason why the GPFG has moved into real estate.
The means: independence We are all aware of the strong academic and empirical evidence in favour of independence of Central banks since the Great inflation of the 1970s.4 Nevertheless, independence is still contested in our democracies. On both sides of the Atlantic, the governments that are currently most critical of independence are the very same that most demonstrate its necessity: their unsustainable fiscal policies, without the anchor of a credible central bank, would pose a threat to price stability. Independence is not for the protection of central bankers; it is for the protection of the citizens, and their collective confidence in the currency. But independence only has real value if there is a clear mandate – price stability – and accordingly a robust performance-based accountability to the country’s citizens and their representatives: every year the President of the ECB testifies four times a year at the European Parliament and gives eight lengthy press conferences (compared with four press conferences for the Fed up to 2018). At the same time, the ECB must increasingly take heed of economic and social players. Independence is not only secured in legislation, but also by the people [its grandes homens] that have embodied it for the past 20 years: Wim Duisenberg, Jean-Claude Trichet, and today, Mario Draghi.