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Norges Bank is the central bank of Norway. and promotes economic stability in Norway.

Norges Bank also manages the Government Pension Fund Global and the bank’s own foreign exchange reserves.

Norges Bank’s mission is to promote economic stability and manage substantial assets on behalf of the Norwegian people.

Norges Bank has executive and advisory responsibilities in the area of monetary policy and is responsible for promoting robust and efficient payment systems and financial markets.

Norges Bank is responsible for the management of Norway’s foreign exchange reserves and the management of the Government Pension Fund Global (GPFG) on behalf of the government.

The investment strategy of the GPFG is designed to obtain the highest possible return within the framework of the investment mandate.

Norges Bank is a separate legal entity owned by the state.

Mandate

Norges Bank’s activities are regulated by the Central Bank Act (official Norwegian version at Lovdata).

The Act states that the purpose of the central banking activities is to maintain monetary stability and to promote the stability of the financial system and an efficient and secure payment system.

The central bank shall contribute to high and stable output and employment.

The Government has defined an inflation target for monetary policy in a regulation pursuant to the Norges Bank Act.

Norges Bank’s responsibilities in managing the Government Pension Fund Global (GPFG) are regulated by means of regulations issued pursuant to the Act relating to the Government Pension Fund Global and a separate management agreement with the Ministry of Finance. See the Management mandate for the Government Pension Fund Global (NBIM).

Core responsibilities

The organization of the bank’s operations is based on clearly defined core activities:

Monetary policy

Its monetary policy aims to maintain monetary stability by keeping inflation low and stable.

The operational target Norges Bank aims at an interest rate setting is inflation close to 2 percent over time.

As the primary objective of monetary policy is low and stable inflation, it can be said that Norway has an inflation-targeting monetary policy regime.

Inflation targeting shall be forward-looking and flexible so that it can contribute to high and stable output and employment, and to counteracting financial imbalances.

The purpose of Norges Bank’s liquidity management is to ensure that the Executive Board’s interest rate decisions have a broad impact on short-term money market rates.

This is achieved by steering the level of bank reserves, i.e. bank deposits at the central bank. More on Liquidity and markets.

Financial stability

Norges Bank shall promote financial stability and contribute to robust and efficient financial infrastructures and payment systems. More on Financial stability.

Norges Bank’s settlement system settles interbank payments in banks’ accounts at Norges Bank, and supplies society with banknotes and coins in a manner that promotes payment system efficiency. Norges Bank also oversees Norwegian payment systems.

Asset management

Norges Bank manages the Norwegian Government Pension Fund Global on behalf of the Ministry of Finance. More information available at the website of Norges Bank Investment Management.

The foreign exchange reserves are the Bank’s contingency funds in international currencies and are to be available for use in foreign exchange market transactions. More about the Foreign exchange reserves.

Norges Bank manages government debt in accordance with a mandate laid down by the Ministry of Finance. Under the mandate, the Bank shall meet the government’s borrowing requirements and manage government debt outstanding. More about Government debt management.

The Policy Rate

The main monetary policy instrument is the policy rate, which is the interest rate on banks’ deposits in Norges Bank up to a specified quota.

The policy rate is Norges Bank’s main instrument for stabilizing inflation and developments in the Norwegian economy.

The policy rate in Norway is the interest rate on banks’ overnight deposits in Norges Bank up to a specified quota.

The policy rate and policy rate expectations primarily influence interbank rates and banks’ interest rates on customer deposits and loans.

Market rates, in turn, affect the krone exchange rate, securities prices, house prices, credit demand, consumption, and investment.

Norges Bank’s policy rate can also influence expectations of future inflation and economic developments. In other words, the policy rate operates on many important economic variables.

The policy rate is set by Norges Bank’s Executive Board. Normally, the Executive Board makes monetary policy decisions eight times a year.

The Executive Board meetings where monetary policy decisions are made are called monetary policy meetings.

For the level of the policy rate to reflect the level of other market rates, Norges Bank manages the total amount of banks’ deposits in Norges Bank so that banks benefit from lending to one another at a rate close to the policy rate.