Oct 20 Norway will soon pick the successor for
central bank Governor Svein Gjedrem, who directs monetary
policy, seeks sweeping changes to Norway's money market and
oversees the country's $500 billion-plus wealth fund.
Gjedrem's second and final term at the helm of Norges Bank
runs out at the end of 2010.
Below are key policy issues for Norges Bank and facts about
the two frontrunners for the post: Oeystein Olsen, chief of
Norway's statistics agency; and Knut Kjaer, former head of the
country's sovereign wealth investment fund.
* Norway's main interest rate is at 2.0 percent, twice that
of the euro zone. Authorities fear that if Norway hikes rates
too quickly, it would push up the crown EURNOK= and slow the
oil-rich state's recovery just as it gains tempo.
Under Gjedrem, Norges Bank projected raising rates by a
quarter point around the turn of the year, but many analysts
expect the next increase to be delayed. [ID:nLDE68T0QU]
* This month Gjedrem announced plans to modify the Norwegian
money market to slash the spread between its rates and
short-term interbank rates that increase lenders' financing
costs and limit the redistribution of liquidity. [ID:nLDE69522P]
* Norges Bank oversees the country's sovereign wealth fund
and has set up a fund management arm -- Norges Bank Investment
Management (NBIM) -- to run day-to-day operations. Gjedrem has
vigorously defended the oil fund against politicians' attempts to
water down its return-focused mandate in favour of agenda-driven
investments like green initiatives. [ID:nLDE6941X6]
Gjedrem's successor will have a tough time keeping
politicians at arm's length from the fund as its value climbs to
record highs that already top Norway's annual GDP.
* Age 58, Director of Statistics Norway for the past 6 years
and expert in econometric modeling.
* Olsen's stats agency sees a slower economic recovery than
Norges Bank under Gjedrem. As a result, Statistics Norway sees
the next interest rate hike being deferred until summer 2011 --
about six months later than Norges Bank has signalled.
* "Our view and our analysis point to a lower interest rate
than Norges Bank sees, based on our view that growth
internationally will remain lower than consensus," Olsen,
told Reuters in an interview last month. [ID:nLDE6941X6]
* Olsen was chief economist in Norway's Finance Ministry
from 1999 to 2004. Gjedrem was also a senior Finance Ministry
official before being selected to run the central bank in 1999.
* Age 54, managed Norway's sovereign wealth fund from 1998
to 2007 under Gjedrem's ultimate authority.
* In that capacity The Times of London called Kjaer "the
most powerful man in Norway" but the low-key Kjaer still often
took public transport to work.
* Has been criticised for embracing greater risk and
exposure to stocks before the 2008 financial crisis, which
temporarily erased some 23 percent of the fund's value after
Kjaer's departure. Kjaer has said critics failed to take into
account the fund's long-term investment horizon.
* Kjaer's inclinations on interest rate policy are unknown.
* Kjaer served as president of RiskMetrics, a New York-based
risk management adviser, from April 2009 until July 2010, when
the company was purchased for $1.55 billion.
* Currently serving five-year term on Ireland's National
Pensions Reserve Fund Commission.
* The new governor will be appointed by the government,
after the finance minister recommends a candidate.
* For a profile on Gjedrem, click on [ID:nLDE67I0EG]
(Editing by Toby Chopra)