It is the inflation target that is the economy’s nominal anchor. The future size of the Petroleum Fund depends on oil price developments. The fiscal guideline ensures that we only use the return on wealth that has already been accumulated. This makes policy robust to changes in oil prices and ensures that petroleum wealth will be of benefit both today and in the future. The government invests petroleum wealth in foreign securities through the Petroleum Fund. Government wealth is thereby more diversified. These investments have no impact on the Norwegian capital market. The Norwegian government’s most important assets are the Government Petroleum Fund, assets in the National Insurance Fund and government direct ownership interests in enterprises. The Petroleum Fund’s equity investments are distributed across many countries, and all equity holdings are less than one per cent of a company’s total value. The National Insurance Fund's investments are mainly confined to Norway. As a result, changes in the value of the Fund's equity portfolio primarily reflect developments in Norwegian business and industry. The Fund has larger ownership interests in individual companies than the Petroleum Fund, and wider fluctuations in value. The government has substantial direct holdings in individual enterprises. In general, concentrated ownership requires a more strategic ownership approach and gives rise to higher risk than diversified ownership. The capital market serves as an intermediary between the government as investor and enterprises seeking capital. This market makes it possible to separate the government's choices from companies' choices.

Svein Gjedrem: Monetary policy and wealth management Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to the Board of Directors of the National Insurance Fund, Oslo, 14 March 2002. This address is based on assessments presented at the press conference following the monetary policy meeting of Norges Bank’s Executive Board on 27 February 2002, and on previous addresses. Accompanying charts can be found on the Norges Bank’s website (www.norges-bank.no). *  *  *  The guidelines for economic policy were revised last year. The expected real return on the Government Petroleum Fund is hereafter to be used over the central government budget, and monetary policy is to be oriented towards low and stable inflation. Economic agents can act on the assumption that low and stable inflation will be a constant feature of economic policy. Wide variations in the price level make it more difficult to predict the real content of agreements and budgets. Unexpected fluctuations in the price level may easily lead to fluctuations in the real economy and instability in financial and property markets. High and variable inflation also leads to an arbitrary redistribution of resources and income. Hence price stability is the best contribution monetary policy can make to economic growth, prosperity and appropriate distribution. Low inflation is the objective, and the interest rate is the instrument. Commercial and savings banks have accounts with Norges Bank, and the Executive Board decides the interest rate on these.