The Ministry of Finance now assesses the value of the government’s share of the remaining petroleum wealth at NOK 3.6 trillion, which is about NOK 550 billion lower than the Ministry’s estimate one year earlier. Chart: Ownership interests In summer 2007, the Ministry of Finance decided to increase the allocation to equity from 40 per cent to 60 per cent and reduce the allocation to bonds correspondingly. Surging oil and gas prices, high oil production and favourable economic conditions for the Norwegian economy led to high transfers to the Fund in the course of 2007 and 2008. Equity prices fell sharply through 2008. It was against this background that the Fund purchased equities for more than NOK 1 trillion between summer 2007 and summer 2009. With a fall in value of 23 per cent or NOK 630 billion, it is understandable that the results in 2008 attracted considerable attention. The most important development for the Fund was perhaps a doubling of its global equity holdings. After earning high returns in the past year and a half, the Fund has also recovered the losses. Chart: Nominal interest rate level and cost of equity capital  7  See “Future management of the Government Petroleum Fund”, Norges Bank’s letter to the Ministry of Finance of 10 April 1997 and “An analysis of the Government Petroleum Fund’s equity allocation”, Norges Bank’s letter to the Ministry of Finance of 15 March 2001. 8  If 1997 is included, the figure is somewhat higher. The money-weighted average return is somewhat lower.
Although such a euro area stance is prevailing, the contribution of individual Member States to the aggregate outcome is suboptimal. Some of them need to take additional measures to ensure compliance with the fiscal rules, while others have scope to use available fiscal space. In addition, all euro area countries should strive for a more growth-friendly composition of fiscal policies by prioritising public investment and reducing the tax burden on labour. The current political and economic momentum in Europe also provides an opportunity to strengthen our Economic and Monetary Union (EMU). Further integration needs to be achieved 2/3  BIS central bankers' speeches  above all by implementing what has been agreed and by completing the common projects we have started. This includes completing the banking union and building a capital markets union. A more complete EMU, with further steps towards a deeper financial, fiscal and economic union, will be the foundation for a stable, flourishing and resilient euro area economy. That is the best contribution which Europe can make to global economic growth and financial stability. By delivering on its mandate, the ECB will continue to play its part in this endeavour. 3/3  BIS central bankers' speeches