Companies that produce weapons in violation of fundamental humanitarian principles and companies that produce tobacco are excluded. Corruption or contributing to severe environmental damage may also lead to exclusion. About 50 companies are excluded. 29 There is often the dilemma of whether we should withdraw entirely from a company or enter into dialogue. If we withdraw, we lose a channel of influence. 24  See Credit Suisse Global Investment Returns Yearbook 2011: https://infocus.credit-suisse.com/app/ _customtags/download_tracker.cfm?dom=infocus.credit-suisse.com&doc=/data/_product_documents/_shop/ 300847/credit_suisse_global_investment_yearbook_2011.pdf&ts=20110326172226  25  Private investors, with shorter investment horizons, should have lower allocations to equities. 26  For more about the Government Pension Fund Global’s investment strategy, see the NBIM website: http://www.nbim.no/en/Investments/  27  Aanund Hylland (2005): “Statens reservefond 1904–25. Et forsøk på å binde politisk handlefrihet? [The government reserve fund 1904-25. An attempt to bind the political room for manoeuvre? ]”, Norges Bank Penger og Kreditt, no. 3, p. 182 (Norwegian only). 28  For more on the fund’s real estate investments, see the NBIM website: http://www.nbim.no/en/Investments/ asset-mix/Real-estate/  29  The Ministry of Finance decides which companies to exclude. For more on exclusion from the Government Pension Fund Global, see website: http://www.regjeringen.no/en/dep/fin/Selected-topics/the-governmentpension-fund/responsible-investments/negative-screening-and-exclusion.html?id=447009  8  BIS central bankers’ speeches  We now own shares in more than 8 000 companies worldwide. As shareholders, we are entitled to vote when important decisions are made about companies in which we have an ownership stake. Should we actively seek to influence developments or should we remain passive observers? Many large funds choose the latter.

This was made possible only in the case of Korea which has helped the country recover from the crisis and was able to bring down interest rate much faster than other crisis countries. The case of Indonesia further led the IMF to reform towards more careful and focused policy prescription. The abrupt close-down of Indonesian commercial banks under the IMF program added to a sense of panic, which led to a broad-based bank run. Moreover, the conditionalities did not focus on the more critical macroeconomic adjustments which were directly related to the problems of the crisis but also included unrelated changes such as requirement to abolish import restrictions on all new and used ships. Secondly, policymakers must be ready to take away the punch bowl. In the past we used to talk about monetary policy being on the alert to take away the punch bowl. This crisis has proven that public policy in general need to observe this principle as well. Fiscal policy must guard against falling into the populist trap. Financial supervisors also need to be vigilant and watch out for signs of excessive credit creation, and act pre-emptively for the cost of cleaning up the crisis far outweigh the brief euphoria and exuberance of the moment. Central bank must maintain independence and credibility in order to voice and conduct appropriate policies that may not be favored politically.