Press release from the Law Commission:

Norges Bank should have a committee for monetary policy and financial stability and an independent board

The Commission on the Act relating to Norges Bank and the Monetary System proposes the establishment of a committee for monetary policy and financial stability at Norges Bank. At the same time, the Commission proposes that the board of Norges Bank be independent of the administration of the Bank.

The Commission today submitted its recommendation to the Minister of Finance, Siv Jensen.

Under the proposal, the committee should have decision-making authority on monetary policy and on work to promote financial stability. It should be composed of the Governor (chair), the Deputy Governor (vice chair), two part-time external members and one member who is a full-time employee of Norges Bank. The first four members are appointed by the Government, while the employee is appointed by the Bank’s board.

“A committee that is so constituted will strengthen the Bank’s work in the area of monetary policy and financial stability. As part-time external members, they will be able to prepare for the deliberations on an equal footing with central bank management. All members will have this area as their core task,” said the chair of the Commission, Svein Gjedrem.

The Commission also proposes that the board of Norges Bank should solely be composed of external members who are appointed by the Government.

“When the responsibility for monetary policy and the work on promoting financial stability are assigned to a committee, the board of Norges Bank should be independent of the administration of the Bank. An independent board will bring the organisation of Norges Bank into closer alignment with rules and recommendations for corporate governance», said Mr Gjedrem.

A board composed of only external members eliminates the need for a separate supervisory board. The Ministry of Finance will retain its function of evaluating the Bank’s use of judgement and goal performance. In addition, the Ministry will oversee the board and approve Norges Bank’s annual accounts. The Storting will further oversee the Bank by means of its deliberations on the Ministry’s white papers and the Office of the Auditor General’s reports on the oversight of the use of powers by the Minister. The Commission is further of the view that hearings of the Bank’s senior management and governing bodies by the Standing Committee on Finance and Economic Affairs should be broadened.

“The proposal further clarifies the lines of responsibility from the Storting to the Ministry and further down to the Bank. The Commission is of the view that the proposal will strengthen the Bank’s democratic legitimacy and its supervision of the monetary system”, said Mr Gjedrem.