Chart: Important considerations for the future The purpose of investment management as defined by the political authorities sets a clear aim for the long-term return. To illustrate this point, I have chosen again to look to Canada, more specifically to the province of Alberta. Alberta has earned considerable oil and gas revenues since the 1970s. In 1976, the provincial government established the Alberta Heritage Savings 5/7  BIS central bankers' speeches  Trust Fund (AHSTF), where these revenues were invested. Chart: Alberta Heritage Savings Trust Fund At the outset, the AHSTF had a number of objectives. In addition to saving for the long term, the AHSTF was also tasked with strengthening and diversifying the economy of Alberta and improving the quality of life of Albertans. Individually, these are admirable aims, but as an overall objective for investment management, they are more demanding. Retrospectively, it is difficult to measure the fund’s contribution to a more diversified economy or to an improved quality of life of residents. Such purposes may also conflict with a desire to save for the future. Alberta has chosen to adjust course along the way. The management objective of the fund is now to maximise long-term returns at a prudent level of risk. Chart: Important considerations for the future The Central Bank Law Commission advises against multiple objectives for the management of the GPFG. The Commission underscores that a change of manager for the GPFG should not occur if this entails that other considerations overshadow the aim of maximising long-term returns.

Beyond this, the Bank has limited responsibility and room for determining the overriding investment strategy, especially in comparison with other large public investment funds. An example is the Singapore Government Investment Corporation (GIC), where the country’s finance ministry also formulates a mandate with a benchmark portfolio and investment limits, but the board of the GIC has greater responsibility for actual asset allocation than Norges Bank’s Executive Board. Another example is the Canada Pension Plan Investment Board. The governance structure of this fund differs even more from our own in that the board itself draws up the investment strategy pursuant to a statutory objective. Chart: Asset allocation in the GPFG, GIC and CPPIB. At the same time, there are considerable differences between the asset allocation in the GPFG and that in the Canadian and Singaporean funds. This probably reflects the differences in governance structure as governance structure and organisation set a framework for the investment strategy to be pursued. In the consultation response to the Central Bank Law Commission’s recommendations, we place emphasis on the relationship between governance, organisation and strategy. I shall return to this shortly. First, however, remember that in addition to defining the investment strategy, the mandate from the Ministry of Finance contains specific reporting requirements. Thanks to its extensive reporting, the GPFG enjoys a reputation of being one of the world’s most transparent sovereign wealth funds. For a fund with the entire population as actual owners, transparency is vital for ensuring democratic control and confidence in investment management.