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Annual Report for Sveriges Riksbank 2020

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Annual Report for Sveriges Riksbank 2020 Submission to the Riksdag 2020/21:RB1 Annual Report for Sveriges Riksbank 2020 To the Riksdag Sveriges Riksbank hereby submits the Riksbank’s Annual Report for 2020 to the Riksdag. In accordance with Chapter 10, Article 3 of the Sveriges Riks- bank Act (1988:1385), the Annual Report includes an administration report, a balance sheet, a profit and loss account and an assessment of the Riksbank’s internal controls. In the administration report, the Riksbank describes how the Bank has con- ducted monetary policy, promoted a safe and effective payment mechanism and carried out other tasks during the financial year. 1 2020/21:RB1 The Executive Board proposes that the Riksdag adopt the Riksbank’s profit and loss account and balance sheet for the financial year 2020 as proposed in the Annual Report. Stockholm, 11 February 2021 On behalf of the Executive Board STEFAN INGVES /Amanda Johansson Stefan Ingves, Cecilia Skingsley, Anna Breman, Martin Flodén, Per Jansson and Henry Ohlsson took part in this decision. The Reporting Clerk was Sofia Kåhre. 2 2020/21:RB1 Table of contents Statement by the Governor ............................................................................. 4 ADMINISTRATION REPORT ...................................................................... 8 Operations and strategies ................................................................................ 8 Organisation .................................................................................................. 15 Maintaining the value of money – price stability .......................................... 20 Asset management ........................................................................................ 35 A stable financial system .............................................................................. 52 Safe and efficient payments .......................................................................... 59 Influence, cooperation and support ............................................................... 65 Research ..................................................................................................... 65 Statistics and the supply of information ..................................................... 66 International cooperation ............................................................................ 68 Communication .......................................................................................... 73 Corporate services and IT ........................................................................... 75 Commitment, risks and responsibility .......................................................... 76 Workplace and employees .......................................................................... 76 Internal control ........................................................................................... 77 Managing risks ........................................................................................... 77 Preparedness ............................................................................................... 79 Environment and sustainability .................................................................. 80 BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ..................... 83 Accounting principles ................................................................................... 83 Balance sheet ................................................................................................ 89 Profit and loss account .................................................................................. 92 Cash flow statement ...................................................................................... 93 Notes ............................................................................................................. 96 The profit and loss account and balance sheet by function ......................... 118 Five-year overview ..................................................................................... 123 ASSESSMENT OF INTERNAL CONTROL ............................................ 126 The departments of the Riksbank and their tasks ........................................ 127 Consultation work of the Riksbank ............................................................. 129 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020 ...................................................................................... 130 Glossary ...................................................................................................... 131 3 2020/21:RB1 Statement by the Governor 2020 was an exceptional year with awful consequences. The pandemic drove the world into a humanitarian crisis that rapidly had substantial economic consequences, both internationally and here in Sweden. When the economy is shaky, it is important that the central bank stands firm. Our objective is to safeguard price stability and our mandate is to ensure financial stability. The pandemic year gave us new, valuable experiences of crisis preparedness – new methods, tools and ways of working digitally – but also the insight that much needs to be done more quickly. Our new initiatives in the payment market, our strengthened preparedness and a monetary policy conducted via the balance sheet mean that we need new skills and more staff on board. But none of the things we have already done would have been possible without the highly knowledgeable and committed staff we already have! The start of the year - the calm before the storm We entered 2020 with a certain level of confidence. After several years of high economic growth, the economic situation in Sweden had become more bal- anced. Growth was expected to be moderate but to increase gradually from the end of 2020. The employment rate was high in both historical and international terms. Inflation had been close to the Riksbank’s target of 2 per cent for a few years, but had been slightly restrained by falling energy prices. The Riksbank therefore conducted an expansionary monetary policy with a repo rate of 0 per cent. Even though the Riksbank noted in February that the outbreak of the novel coronavirus in China had increased uncertainty, the prospects for eco- nomic developments just then seemed a little brighter. The Riksbank continued to develop its operations in line with our strategic plan from 2019, with the vision of being an innovative central bank with a high level of preparedness. We worked intensively to secure the future existence of the Swedish krona, in both physical and digital forms. Together with an exter- nal supplier, we started to test a technical solution for a digital e-krona. We initiated the work of making real time payments possible, around the clock, in the RIX payment system and entered into an agreement with the European Central Bank (ECB) to use its TIPS platform. We discussed a development of the technical infrastructure for the settlement of Swedish securities and we worked on our responsibility for ensuring reasonable access to cash across the entire country, both under normal circumstances and during crises. In parallel to our day-to-day work, we monitored developments surround- ing the coronavirus pandemic, reviewed our travel recommendations and, to be on the safe side, updated our pandemic plan. 4 STATEMENT BY THE GOVERNOR 2020/21:RB1 Turmoil on the financial markets and an economy in free fall demanded measures The realisation that the viral outbreak was developing into a pandemic dawned slowly and, by the start of March, the pandemic was a fact. For us, this meant that, just days before we were to participate in the first hearing of 2020 on monetary policy by the Riksdag Committee on Finance, we had to make com- pletely new plans. All the curves were pointing in the wrong direction. We were now in an acute situation. We saw great turmoil in the financial markets in the wake of the coronavirus. It now became necessary for Sveriges Riks- bank, in a very concrete and serious way, to be both innovative and to increase preparedness. The days, weeks and months that followed were dramatic. Right from the start of the crisis, the Riksbank decided to offer loans of up to SEK 500 billion to the banks to facilitate lending, above all to small and medium-sized enterprises. We also decided to purchase Swedish interest-bear- ing securities up to a total value of SEK 500 billion, later expanded to SEK 700 billion, and to offer loans of up to USD 60 billion to the banks to ensure there would be no lack of liquidity in the financial system. These decisions have been successively implemented. By the end of 2020, the Riksbank’s pro- gramme of measures had thus reached about SEK 1,800 billion, corresponding to just over one-third of Sweden’s GDP. These initiatives were followed by a steady stream of monetary policy meetings, press releases, partly or com- pletely online press conferences and extra online speeches in which we com- municated the measures we had implemented. The measures contributed to low interest rates and access to credit The financial assets in the Riksbank’s balance sheet increased heavily as the Riksbank purchased large amounts of securities. It is easy to conclude that monetary policy over the year thus had less of a focus on the interest rate – which was held at 0 per cent over the entire year. But asset purchases are just one way of holding the general level of interest rates in the economy low, which we deemed to be the most effective strategy under the prevailing cir- cumstances. Monetary policy over
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