The Financial Markets Department
Published under: Stoltenberg's 2nd Government
Publisher Ministry of Finance
The work of the Ministry of Finance includes a number of responsibilities toward the financial markets. Since the beginning of the 1980s the Norwegian financial market has undergone profound changes. The development has been characterised by deregulation, freer regulatory framework, and a strong growth followed by great losses and crises in the financial system. There have been great structural changes in that different kinds of institutions within the financial community to a greater degree compete about the same customers. At the same time, the financial markets are, to a greater degree, being internationalised. These upheavals have enhanced the need for an adjustment of the statutory framework of the financial community through legislation and regulations.
The main purpose of the statutory framework is to create favourable conditions for a stable and efficient system of payments and capital allocation. Solid and efficient financial institutions are necessary if the main goals of the economic policy are to be reached.
The Financial Markets Department attends to many of the responsibilities of the Ministry of Finance toward the financial markets. The department handles structural and legal issues concerning the financial markets, international co-operation and planning, as well as a number of separate cases. These include applications for concessions and dispensations from the current legislation and regulations. The statutory framework for the Central Bank of Norway (Norges Bank) and Financial Supervisory Authority of Norway (Kredittilsynet) is handled by this department.
The responsibilities of the ministry regarding the financial markets include the following areas:
Regulation according to provisions made in the central legislation
- Responsibilities as tax authority
- Management of public ownership in financial institutions
The Ministry of Finance as Regulatory Authority
One of the main responsibilities of the Ministry of Finance is the regulation of the financial markets according to provisions in central legislation. The EEA-agreement sets up a framework for the regulation of financial institutions in Norway. The agreement is implemented in Norwegian law through legislation and regulations. Among the most central acts concerning the financial market are the acts relating to financial institutions, insurance companies, savings banks, commercial banks and securities trading, with accompanying regulations.
Financial institutions include banks, insurance companies, and financing undertakings. In Norway, acquisitions and mergers of financial institutions are subject to concessions. The Financial Institutions Act (act 10 June 1988 no. 40) sets forth criteria for permission to establishment, winding up, and merging of financial institutions. The provisions on concessions exist to secure adequate competition in the financial markets, while at the same time securing the necessary solidity.
In The Insurance Activity Act (act 10 June 1988 no. 39) regulations concerning technical appropriation, solvency margin requirements and equity and subordinated loan capital are set forth. The regulations on equity and subordinated loan capital for insurance companies are the same as for other financial institutions. The required equity and subordinated loan capital defines the capital needed by an insurance company in addition to technical appropriation.
The purpose of The Securities Trading Act (act 19 June 1997 no. 79) is to ensure efficient, well organised and secure trade in securities and derivatives. The Securities Trading Act sets forth provisions on insider trading, disclosure of share purchases, mandatory bids, disclosure requirements, as well as provisions on concessions for rendering financial services. The Securities Trading Act also includes general requirements for prudent business practice and prohibits unreasonable business methods.
The Ministry of Finance as Tax Authorithy
Legislation concerning taxes and public duties often has impact on the financial markets. Thus, the Ministry of Finance plays an important role on the basis of its responsibilities for tax and duty legislation as well as for the legislation regulating the financial markets, such as tax favoured supplementary pension schemes the favourable treatment of such schemes is conditioned upon compliance with legislation on collective or individual pension schemes.
The Financial Supervisory Authority of Norway
The Financial Supervisory Authority of Norway performs a number of tasks for the Ministry of Finance, and is responsible for the supervision of financial institutions in Norway. The main responsibility of the Financial Supervisory Authority of Norway is to ensure that the financial institutions act according to the legal framework that applies to the financial markets. This includes commercial and savings banks, life and general insurance companies, pension funds, financing undertakings and insurance brokers. According to The Act on The Banking, Insurance and Securities Commission (act 7 Desember 1956 no. 1) the Commission is to ensure that the institutions subject to its supervision are operated in an efficient way and according to existing laws and regulations. This is done partly by inspections, partly by the collection of reports on financial conditions etc. The Financial Supervisory Authority of Norway also advices the Ministry of Finance about the framing of regulations. When the Ministry of Finance considers cases on the financial markets, it is customary to request the Financial Supervisory Authority of Norways assessment.