natgillin/translations-raw huggingface dataset:
First line of reserves
First line of reserves
Second line of reserves
Second line of reserves
Immunisation portfolio
Immunisation portfolio
Total international reserves
Total international reserves
Norges Bank's foreign assets
Norges Bank's foreign assets
The Government Petroleum Insurance Fund
The Government Petroleum Insurance Fund
Total managed by Norges Bank
Total managed by Norges Bank
35.3
35.3
Virtually all outstanding central government foreign debt will be repaid in 1997 and 1998.
Virtually all outstanding central government foreign debt will be repaid in 1997 and 1998.
Transfers from the international reserves to the Government Petroleum Fund are carried out twice a year.
Transfers from the international reserves to the Government Petroleum Fund are carried out twice a year.
The first transfer is made on 31 December, based on preliminary estimates.
The first transfer is made on 31 December, based on preliminary estimates.
Final settlement takes place at the end of May for the preceding year.
Final settlement takes place at the end of May for the preceding year.
Pursuant to the Norges Bank Act, the government may issue regulations for the investment of official foreign exchange reserves.
Pursuant to the Norges Bank Act, the government may issue regulations for the investment of official foreign exchange reserves.
The government has never exercised this right.
The government has never exercised this right.
The Bank is currently working on the risk evaluations underlying the existing regulations.
The Bank is currently working on the risk evaluations underlying the existing regulations.
As I will return to this later, I will limit myself to giving a brief outline of these regulations here.
As I will return to this later, I will limit myself to giving a brief outline of these regulations here.
In addition to requirements regarding liquidity, the regulations specify rules concerning exchange-rate risk, interest-rate risk and credit risk in particular.
In addition to requirements regarding liquidity, the regulations specify rules concerning exchange-rate risk, interest-rate risk and credit risk in particular.
Exchange-rate risk reflects the import weights in the Norwegian economy and covariance between the currencies.
Exchange-rate risk reflects the import weights in the Norwegian economy and covariance between the currencies.
As a result, the distribution of currencies is as follows:
As a result, the distribution of currencies is as follows:
GUIDELINES
GUIDELINES
ACTUAL 31.
ACTUAL 31.
DECEMBER 1996
DECEMBER 1996
FIRST AND SECOND LINES OF RESERVES
FIRST AND SECOND LINES OF RESERVES
PETRO.
PETRO.
IMMUNISATION PORTFOLIO
IMMUNISATION PORTFOLIO
DEM-BLOCK
DEM-BLOCK
50-60%
50-60%
41-47%
41-47%
57.0%
57.0%
54.1%
54.1%
42.8%
42.8%
10-20%
10-20%
11-17%
11-17%
16.7%
16.7%
7.8%
7.8%
15.8%
15.8%
0-10%
0-10%
14-20%
14-20%
2.6%
2.6%
17.0%
17.0%
USD/CAD
USD/CAD
13-23%
13-23%
15-21%
15-21%
17.8%
17.8%
18.7%
18.7%
17.6%
17.6%
2-12%
2-12%
4-10%
4-10%
5.9%
5.9%
19.4%
19.4%
As regards average interest-rate risk, the regulations stipulate that the maximum modified duration shall be 5.
As regards average interest-rate risk, the regulations stipulate that the maximum modified duration shall be 5.
The benchmark portfolio is set at 3.
The benchmark portfolio is set at 3.
The main activity comprises selecting profitable close substitutes for securities included in the given benchmark.
The main activity comprises selecting profitable close substitutes for securities included in the given benchmark.
The department was established in 1986, when the operational sections of the former Foreign Exchange Department and Credit Policy Department merged.
The department was established in 1986, when the operational sections of the former Foreign Exchange Department and Credit Policy Department merged.
As far as I know, we were the first central bank to organise activities in this way.
As far as I know, we were the first central bank to organise activities in this way.
The chart shows the current organisation of the department.
The chart shows the current organisation of the department.
We now employ 52 persons, of which two work in the somewhat broader field of research in the Research Department.
We now employ 52 persons, of which two work in the somewhat broader field of research in the Research Department.
Total estimated resource used in Norges Bank in connection with asset management amounts to 24 person-years.
Total estimated resource used in Norges Bank in connection with asset management amounts to 24 person-years.
A working group is therefore now assessing the ambitions and resources used in connection with asset management, including a possible out-sourcing of some of the work to a subsidiary.
A working group is therefore now assessing the ambitions and resources used in connection with asset management, including a possible out-sourcing of some of the work to a subsidiary.
The committee is chaired by the Deputy Governor and comprises representatives from each of the policy departments and the Research Department.
The committee is chaired by the Deputy Governor and comprises representatives from each of the policy departments and the Research Department.
The committee normally meets four times a year.
The committee normally meets four times a year.
Since 1 January this year, the Bank's organisation is composed of 3 wings which cover the central bank's core activities, plus one administrative wing.
Since 1 January this year, the Bank's organisation is composed of 3 wings which cover the central bank's core activities, plus one administrative wing.
The Market Operations Department is in Wing I - Monetary Policy.
The Market Operations Department is in Wing I - Monetary Policy.
In spring 1996, the Executive Board carried out an assessment of strategies for the central bank's further development.
In spring 1996, the Executive Board carried out an assessment of strategies for the central bank's further development.
One conclusion was that the Bank should concentrate on its core activities.
One conclusion was that the Bank should concentrate on its core activities.
Another was that the Bank should strive to make its activities more transparent.
Another was that the Bank should strive to make its activities more transparent.
We also intend to publish these results.
We also intend to publish these results.
In addition it was decided to transfer the management of some funds to external portfolio managers.
In addition it was decided to transfer the management of some funds to external portfolio managers.
This decision was announced and more than 100 institutions subsequently expressed their interest.
This decision was announced and more than 100 institutions subsequently expressed their interest.
Drawing up a short-list and making the final selection was therefore an extensive process.
Drawing up a short-list and making the final selection was therefore an extensive process.
ABN AMRO Asset Management, London, was given responsibility for managing a portfolio equivalent to DEM 150 million for European currencies, and Goldman Sachs Asset Management, New York, was assigned the management of a portfolio equivalent to USD 100 million for investment in USD and CAD.
ABN AMRO Asset Management, London, was given responsibility for managing a portfolio equivalent to DEM 150 million for European currencies, and Goldman Sachs Asset Management, New York, was assigned the management of a portfolio equivalent to USD 100 million for investment in USD and CAD.
Norges Bank signed a contract with the Bankers Trust Company for deposit services and returns analysis in connection with the external management.
Norges Bank signed a contract with the Bankers Trust Company for deposit services and returns analysis in connection with the external management.
Strategic management choices
Strategic management choices
Equity
Equity
Norges Bank's foreign currency holdings are now larger than those normally required for intervention purposes.
Norges Bank's foreign currency holdings are now larger than those normally required for intervention purposes.
Historically, stocks have proved to be a better hedge against inflation than bonds.
Historically, stocks have proved to be a better hedge against inflation than bonds.
Stocks have historically had a weaker correlation to oil prices than bonds.
Stocks have historically had a weaker correlation to oil prices than bonds.
This is important as Norway's total national wealth declines in value when calculations are based on lower oil prices.
This is important as Norway's total national wealth declines in value when calculations are based on lower oil prices.
Bonds
Bonds
0.15
0.15
0.39
0.39
0.23
0.23
0.36
0.36
Stocks
Stocks
-0.06
-0.06
-0.49
-0.49
-0.39
-0.39
-0.10
-0.10
*) Annual changes in the oil price calculated from OECD data, annual returns on bonds from the JP Morgan Bond Index, annual returns on stocks from MSCI.
*) Annual changes in the oil price calculated from OECD data, annual returns on bonds from the JP Morgan Bond Index, annual returns on stocks from MSCI.
Stocks are also more volatile than bonds, entailing a greater risk of losses in the short term.
Stocks are also more volatile than bonds, entailing a greater risk of losses in the short term.
In the longer term, however, the expected return is higher.
In the longer term, however, the expected return is higher.
Here are some figures to illustrate this:
Here are some figures to illustrate this:
Mean return
Mean return
9.8%
9.8%
9.5%
9.5%
10.1%
10.1%
11.4%
11.4%
15.1%
15.1%
11.2%
11.2%
25.5%
25.5%
*) Data supplied by JP Morgan.
*) Data supplied by JP Morgan.
Twenty years is a relatively short period.
Twenty years is a relatively short period.
Holding period
Holding period
Percentage of periods with excess returns in the stock market
Percentage of periods with excess returns in the stock market
59.0%
59.0%
71.2%
71.2%
82.3%
82.3%
30 years
30 years
100.0%
100.0%
This would also provide information about the probability of losses in the portfolio in any given year.
This would also provide information about the probability of losses in the portfolio in any given year.
Bonds:
Bonds:
Salomon Brothers US Index
Salomon Brothers US Index
Salomon Brothers Japan Index
Salomon Brothers Japan Index
Salomon Brothers European Index
Salomon Brothers European Index
Equities:
Equities:
Morgan Stanley Capital Int.
Morgan Stanley Capital Int.
North-America Index
North-America Index
Pacific Index
Pacific Index
Europe Index
Europe Index
Market allocation:
Market allocation:
USA/North-America:
USA/North-America:
Japan/Pacific:
Japan/Pacific:
Europe:
Europe:
Some may argue that historical return figures are not representative of expected future developments.
Some may argue that historical return figures are not representative of expected future developments.
As regards the point about avoiding negative returns, the main risk factors are:
As regards the point about avoiding negative returns, the main risk factors are:
that returns on both bonds and equity will fall,
that returns on both bonds and equity will fall,
that the correlation between the equity and bond markets increases.
that the correlation between the equity and bond markets increases.
As there is no perfect correlation between bonds and equity, substantial losses in bonds and stocks do not necessarily coincide.
As there is no perfect correlation between bonds and equity, substantial losses in bonds and stocks do not necessarily coincide.
Based on historical figures, an equity proportion of between 30 to 40 per cent would incur the smallest losses in the unadjusted returns series.
Based on historical figures, an equity proportion of between 30 to 40 per cent would incur the smallest losses in the unadjusted returns series.
But such an extreme aversion to risk is hardly relevant in our case.
But such an extreme aversion to risk is hardly relevant in our case.
What should then the equity proportion of the Government Petroleum Fund be?
What should then the equity proportion of the Government Petroleum Fund be?
Currency and market distribution
Currency and market distribution
The problem is, of course, that we know what today's import weights are, but can hardly guess what these weights will be in 20 years.
The problem is, of course, that we know what today's import weights are, but can hardly guess what these weights will be in 20 years.
Another point is that the import weights are not adjusted for trade flows with third countries.
Another point is that the import weights are not adjusted for trade flows with third countries.
Germany and Sweden account for the largest share of Norwegian imports.
Germany and Sweden account for the largest share of Norwegian imports.
But Swedish and German industry also rely on imports from other countries.
But Swedish and German industry also rely on imports from other countries.
Norwegian import weights are fairly similar to our export weights.
Norwegian import weights are fairly similar to our export weights.
Global export weights, or global GDP weights, have their appeal from this perspective.
Global export weights, or global GDP weights, have their appeal from this perspective.
Market capitalisation weights will then minimise these transaction costs.
Market capitalisation weights will then minimise these transaction costs.
Both GDP weights and global export weights are closer to the market capitalisation weights than the Norwegian import weights.
Both GDP weights and global export weights are closer to the market capitalisation weights than the Norwegian import weights.
Finally, one may consider the purpose of an in-depth analyses of the distribution of investments by country.
Finally, one may consider the purpose of an in-depth analyses of the distribution of investments by country.
We are thus left with a number of options which are to some extent quite distinct from each other.
We are thus left with a number of options which are to some extent quite distinct from each other.
What is the conclusion?
What is the conclusion?
In this connection, two questions must be answered:
In this connection, two questions must be answered:
How should the portfolio's risk be measured?
How should the portfolio's risk be measured?
The current guidelines for the management of foreign exchange reserves set out separate limits on currency distribution and duration.
The current guidelines for the management of foreign exchange reserves set out separate limits on currency distribution and duration.
But the methods "Value at risk/Tracking error" have certain drawbacks.
But the methods "Value at risk/Tracking error" have certain drawbacks.
The management of the Petroleum Fund entails new challenges as regards the definition of risk limits.
The management of the Petroleum Fund entails new challenges as regards the definition of risk limits.
Limits must not only be defined for fixed-income portfolios, but also for portfolios with a high probability for equity investments.
Limits must not only be defined for fixed-income portfolios, but also for portfolios with a high probability for equity investments.
Operational aspects
Operational aspects
Liquidity
Liquidity
It will probably be necessary to spread the purchases over a longer period.
It will probably be necessary to spread the purchases over a longer period.
This will create problems when comparing against the benchmark portfolio.
This will create problems when comparing against the benchmark portfolio.
Ownership
Ownership
It goes without saying that Norges Bank, as the central bank, avoids investments that entail expectations of active ownership on the part of the Bank.
It goes without saying that Norges Bank, as the central bank, avoids investments that entail expectations of active ownership on the part of the Bank.
This could put the central bank in an unfavourable light in the public opinion.
This could put the central bank in an unfavourable light in the public opinion.
This question also makes synthetic equity investments potentially interesting.
This question also makes synthetic equity investments potentially interesting.
Internal/external management
Internal/external management
The management of equity portfolios requires broad competence in an organisation.
The management of equity portfolios requires broad competence in an organisation.
In the front office the competence required will obviously depend on the management style adopted.
In the front office the competence required will obviously depend on the management style adopted.
Active management, where one takes positions in individual companies and industries, requires more resources than a more risk-averse strategy such as indexing.
Active management, where one takes positions in individual companies and industries, requires more resources than a more risk-averse strategy such as indexing.
However, indexing does not require the same insight into individual companies, but is more a question of having the necessary technological support and flexibility for combining direct investments and derivatives.
However, indexing does not require the same insight into individual companies, but is more a question of having the necessary technological support and flexibility for combining direct investments and derivatives.
But equity investments also require considerable resources for purposes of settlement, accounting, and control.
But equity investments also require considerable resources for purposes of settlement, accounting, and control.
Such a system is not implemented overnight.
Such a system is not implemented overnight.
But we are hesitant to define mandates for external managers which we are not able to control ourselves.
But we are hesitant to define mandates for external managers which we are not able to control ourselves.
Organizers: The Graduate Institute, Geneva and Norges Bank, Oslo
Organizers: The Graduate Institute, Geneva and Norges Bank, Oslo
Venue: The Graduate Institute, Geneva, AJF room at Villa Barton, 132, rue de Lausanne, 1202 Geneva
Venue: The Graduate Institute, Geneva, AJF room at Villa Barton, 132, rue de Lausanne, 1202 Geneva
Thursday 30 October
Thursday 30 October
Session I Writing Central Bank history – what are the challenges?
Session I Writing Central Bank history – what are the challenges?
Chair: Øyvind Eitrheim, Norges Bank Archive work on International Reserves (Marc Flandreau, The Graduate Institute)
Chair: Øyvind Eitrheim, Norges Bank Archive work on International Reserves (Marc Flandreau, The Graduate Institute)
Archive work in the Bank of England project (Forrest Capie, Bank of England)
Archive work in the Bank of England project (Forrest Capie, Bank of England)
The Austrian National Bank project (Clemens Jobst, Oesterreichische Nationalbank)
The Austrian National Bank project (Clemens Jobst, Oesterreichische Nationalbank)
Archive work in the Norges Bank project (Einar Lie and Christian Venneslan, University of Oslo)
Archive work in the Norges Bank project (Einar Lie and Christian Venneslan, University of Oslo)
History projects about the BIS and Banca d’Italia (Gianni Toniolo, Duke University)
History projects about the BIS and Banca d’Italia (Gianni Toniolo, Duke University)
The Swiss National Bank project (Patrick Halbeisen, Swiss National Bank)
The Swiss National Bank project (Patrick Halbeisen, Swiss National Bank)
The Norges Bank history project (Sverre Knutsen, Norwegian School of Management (BI) and Einar Lie, University of Oslo)
The Norges Bank history project (Sverre Knutsen, Norwegian School of Management (BI) and Einar Lie, University of Oslo)
Friday 31 October
Friday 31 October
Session II Monetary History and Business Cycles Chair: Michael Bordo, Rutgers University
Session II Monetary History and Business Cycles Chair: Michael Bordo, Rutgers University
Chair’s introduction
Chair’s introduction
Constructing and Using Long-Run Historical Data.
Constructing and Using Long-Run Historical Data.
An International Perspective (Pierre Siklos, WLU)
An International Perspective (Pierre Siklos, WLU)
Chair’s summary remarks
Chair’s summary remarks
Session II (cont’d) Monetary History and the Monetary Policy Framework
Session II (cont’d) Monetary History and the Monetary Policy Framework
History as a Guide to Current Monetary Policy (Robert Hetzel, Federal Reserve Bank of Richmond)
History as a Guide to Current Monetary Policy (Robert Hetzel, Federal Reserve Bank of Richmond)
Historical perspectives on Central Bank liquidity policy (Harold James, Princeton University)
Historical perspectives on Central Bank liquidity policy (Harold James, Princeton University)
Session III European Monetary History – Nordic perspectives Chair: Marc Flandreau, The Graduate Institute, Geneva
Session III European Monetary History – Nordic perspectives Chair: Marc Flandreau, The Graduate Institute, Geneva
The Monetary History of Norway (Jan Tore Klovland and Lars Fredrik Øksendal)
The Monetary History of Norway (Jan Tore Klovland and Lars Fredrik Øksendal)
Session III (cont’d) Monetary History – Nordic perspectives
Session III (cont’d) Monetary History – Nordic perspectives
How to write the history of the Swedish Riksbank (Lars Jonung, European Commission)
How to write the history of the Swedish Riksbank (Lars Jonung, European Commission)
The Bank of Finland history project (Juha Tarkka, Bank of Finland)
The Bank of Finland history project (Juha Tarkka, Bank of Finland)
Norges Bank will sell foreign exchange equivalent to NOK 300 million per day up to and including 12 December in connection with the transfers to the Government Pension Fund Global (GPFG) in December 2014.
Noregs Bank vil selje valuta tilsvarande 300 millionar kroner kvar dag til og med 12. desember 2014 i samband med avsettinga til Statens pensjonsfond utland (SPU).
Norges Bank will gradually reduce the size of the petroleum buffer portfolio in 2015 by selling foreign exchange in the market.
Noregs Bank vil gjennom 2015 gradvis redusere størrelsen på petrobufferporteføljen ved å selje valuta i marknaden.
The upturn in the world economy remains moderate and there is considerable uncertainty surrounding developments ahead.
Oppgangen i verdensøkonomien er fortsatt moderat, og usikkerheten om utviklingen fremover er stor.
Growth prospects for the Norwegian economy have weakened.
Her hjemme er vekstutsiktene svekket.
Activity in the petroleum industry is softening and the sharp fall in oil prices is likely to amplify this tendency.
Aktiviteten i petroleumsnæringen avtar, og det kraftige fallet i oljeprisen vil trolig forsterke denne utviklingen.
This will have spillover effects on the wider economy and unemployment may edge up ahead.
Det vil gi ringvirkninger for resten av økonomien, og arbeidsledigheten kan øke noe fremover.
"The analysis in the Monetary Policy Report presented today implies a key policy rate of 1¼ percent, or somewhat lower, in the period towards the end of 2016", says Governor Øystein Olsen.
– Analysene i den pengepolitiske rapporten vi legger fram i dag, tilsier en styringsrente på 1¼ prosent eller noe lavere fram mot slutten av 2016, sier sentralbanksjef Øystein Olsen.
Capacity utilisation in the mainland economy will probably decline to a further extent than projected earlier, but is expected to increase again towards the end of the projection period.
Kapasitetsutnyttingen i fastlandsøkonomien vil trolig avta mer enn tidligere anslått, men ventes å øke igjen mot slutten av anslagsperioden.
Inflation is projected to lie close to 2.5 percent in the coming years.
Prisveksten ventes å ligge nær 2,5 prosent de neste årene.
The Executive Board decided at its meeting that the key policy rate should lie in the interval ¾–1¾ percent in the period to the publication of the next Report on 19 March 2015, unless the Norwegian economy is exposed to new major shocks.
Hovedstyret vedtok på møtet at styringsrenten bør ligge i intervallet ¾–1¾ prosent i perioden fram til neste rapport legges fram 19. mars 2015, med mindre norsk økonomi blir utsatt for nye store forstyrrelser.
Norges Bank has submitted its quarterly advice on the level of the countercyclical capital buffer requirement for banks to the Ministry of Finance.
Norges Bank har sendt Finansdepartementet det kvartalsvise rådet om krav til motsyklisk kapitalbuffer i bankene.