Annual Report 2005

Annual Report 2005 Sveriges riksbank SE-103 37 Stockholm (Brunkebergstorg 11) www.riksbank.se Telephone: +46 8 787 00 00 Fax: +46 8 21 05 31 SVERIGES RIKSBANK Sveriges Riksbank is Sweden’s central bank and a public authority reporting to the Riksdag, the Swedish Parliament. The Riksbank is responsible for the conduct of Swedish monetary policy with the objective of maintaining price stability. The Bank is also entrusted with the task of promoting a safe and effi cient payment system. The Riksbank has more than 400 employees and is led by an Executive Board consisting of the Governor, Stefan Ingves, and fi ve deputy governors. The members of the Executive Board are appointed by the General Council of the Riksbank for a term of offi ce of six years. To order this publication, please contact Sveriges Riksbank, Förrådet, 103 37 Stockholm, Sweden Fax +46-8-210531. E-mail: [email protected] The publication can also be downloaded from the Riksbank’s website www.riksbank.se Production: Sveriges Riksbank Graphic design: Logdesign Photography: cover, pages 8, 26 Hans Strand/Briljans. se, cover, page 36 Johnér, page 4 UN/DPI. pages 4, 5 Stefan Borgius, pages 4, 5, 81 Sveriges riksbank, pages 6, 47, 48, 49, 50, 52, 53, 54, 55, 82 Dan Coleman, page 12 Rymdbolaget (Swedish Space Corporation), page 14 Vattenfall/Hans Blomberg, page 19 Hans Wretling/Pixgallery, page 22 Claes Grundsten/ Bildhuset, page 25 Kent Norberg, page 28 Carl-Erik Andersson/Scania bildbyrå, page 33 Digital Vision, page 34 Matton Collection, page 39 Photo Library, page 41 Peter Gerdehag/Briljans.se, page 81 Posten Frimärken. Printing: Jernström Offset ISSN 1400-4259 Stockholm 2006 ■ Contents INTRODUCTION MAINTAINING THE 2005 in brief 4 VALUE OF MONEY – PRICE STABILITY The year in fi gures 5 Statement by the Governor 6 ADMINISTRATION REPORT The tasks and role of the Riksbank 7 Maintaining the value of money A SAFE AND EFFICIENT – price stability 9 PAYMENT SYSTEM A safe and effi cient payment system – FINANCIAL STABILITY – fi nancial stability 27 Asset management 37 Statistics 42 International cooperation 44 Organisation 46 ASSET MANAGEMENT Governance 51 Changes in the Riksbank’s role in cash management – summary of developments 1998-2005 56 BALANCE SHEET AND PROFIT AND LOSS ACCOUNT Accounting principles 61 Balance sheet 64 Profi t and loss account 65 Notes 66 Five-year overview 72 The Riksbank’s subsidiaries 73 Proposal for the allocation of profi ts for 2005 75 Auditor’s report 76 The Riksbank’s consultation responses 77 Glossary, publications and addresses 79 The Tumba Bruk museum 81 The Riksbank’s Prize in Economic Sciences 2005 82 2005 IN BRIEF ■ 2005 in brief 4 ■ Infl ation, in terms of changes in the consumer ■ The Riksbank reported a profi t of sek 3.3 price index (cpi) and und1x, a widely used billion. The value of the foreign exchange re- measure of underlying infl ation, averaged serve increased by sek 16 billion as a result of 0.5 per cent and 0.8 per cent, respectively, a weakening of the Swedish krona. This un- during the year. According to the Riksbank’s realised increase in value is reported in a most recent estimates, the economic growth special revaluation account in the balance SVERIGES RIKSBANK 2005 rate in Sweden was 2.4 per cent. sheet, however, and as a result does not affect ■ The stability of the fi nancial system contin- the profi t and loss account. ued to be sound. ■ On 11 October, the General Council decided ■ On 20 June, the Riksbank decided to reduce to appoint Stefan Ingves to be the Riksbank’s the repo rate by 0.5 percentage points to 1.5 new governor. At the same time, Svante Öberg per cent. was appointed as a new member of the Riks- ■ During the year the Riksbank published four bank’s Executive Board. The General Council Infl ation Reports and two Financial Stability also re-elected Lars Nyberg to be Deputy Reports. Governor for a new term of offi ce. Lena Endre presented Dag Hammarskjöld was Lars Heikensten together Karin Bjers and Tommy some of Dag Hammar- Chairman of the Riksbank’s with Ricardo Lagos Persson presented the skjöld’s texts in connec- General Council during Escobas, President of Riksbank’s information tion with the Riksbank’s the years 1941-1948. Chile, and Vittorio Corbo, film for upper-secondary commemoration of the the Governor of the school students. 100th anniversary of his Chilean central bank, in birth. connection with the Riks- bank’s conference on inflation targeting (above). THE YEAR IN FIGURES ■ The year in fi gures THE YEAR IN FIGURES 5 Key data 2005 2004 2003 At year-end Result for the year (SEK billion) 3.3 -2.8 -9.3 Gold and foreign exchange reserve (SEK billion) 195 163 159 Number of employees SVERIGES RIKSBANK 2005 (full-time equivalent) 410 434* 426 Repo rate (per cent) 1.5 2.0 2.75 Short-term interest rate (3 month T-bills, per cent) 1.69 1.99 2.65 Long-term interest rate (10-year government bonds, per cent) 3.34 4.03 4.78 Annual average GDP (percentage change) 2.4** 3.7 1.7 Unemployment (per cent) 5.9** 5.9*** 3.3*** Headline inflation, CPI (percentage change) 0.5 0.5 2.0 Underlying inflation, UNDIX (percentage change) 0.8 0.9 2.3 * of which 33 relate to previous employees of SKAB ** Forecast in Inflation Report 2005:4 *** The Riksbank has linked the historical unemployment series backwards Sources: Statistics Sweden and the Riksbank The King and Queen visi- Stefan Ingves (above), Mervyn Allister King, ted the Riksbank in 2005 Johan Gernandt, Vice Governor of the Bank of for a presentation of the Chairman of the General England, visited the Riksbank’s activities. Council, Jan Bergqvist, Riksbank in connection Chairman of the General with the presentation of Council, and Svante the Riksbank’s Prize in Öberg. Economic Sciences. STATEMENT BY THE GOVERNOR ■ Statement by the Governor 6 The Riksbank’s main tasks are to maintain stable prices and work for a fi nancial system that func- tions smoothly. These are the prerequisites for a stable society and economic growth and, as a result, it is a great responsibility and a privilege to take up my duties as Governor of the Riksbank. SVERIGES RIKSBANK 2005 public. For my part – I was around during the crisis years of the early 1990s – it is very pleas- ing to see how confi dence in the Riksbank has been reinforced since then. Maintaining confi - dence among broad groups in society is a key assignment for me, and for my colleagues on the Executive Board. The Riksdag has given the Riksbank a man- date to take independent decisions. We have an obligation to openly report the reasons for our decisions, and to ensure that the principles gov- erning our actions are clear. Monetary policy must be easy to understand. The Riksbank is one of the smallest central banks in the world in relation to the size of the nation’s economy. There are many ways of measuring effi ciency, but the number of employees provides some indication A great deal has been done to modernise and rationalise activities since I left the Bank in 1998. The busi- ness plan for 2006 envisages further measures, although the really signifi cant structural changes have already been implemented. My aim is to continue along the path that has been staked out. The focus must be on basing monetary policy on sound economic analysis, continuing to concentrate on our core activities, and explaining our assessments and decisions Stefan Ingves by applying good communications techniques. Sveriges Riksbank is highly respected and has All this calls for continued, purposeful day-to- a good reputation, both in Sweden and in an day endeavours by a large number of experi en- international context. We are considered to be ced and competent employees. competent and effi cient. Price stability is satis- I look forward with some pride to helping to factory, and we are in the forefront as regards shape the Riksbank’s work. ways of analysing stability and effi ciency in the fi n a n c i a l s y s t e m . Central banks must have strong roots and support in the society in which they operate, and Stefan Ingves they need to win the confi dence of the general Governor of the Riksbank THE TASKS AND ROLE OF THE RIKSBANK ■ The tasks and role of the Riksbank The Riksbank is Sweden’s central bank and a public authority that reports to the Swedish Riksdag 7 (parliament). The Riksbank is responsible for the conduct of Swedish monetary policy, with the goal of maintaining price stability. The Bank is also entrusted with the task of promoting a safe and effi cient payment system. SVERIGES RIKSBANK 2005 MAINTAINING THE VALUE OF MONEY actions with other banks in a safe and secure – PRICE STABILITY manner. The Riksbank’s price stability objective, laid The Riksbank’s analysis of fi nancial stability down by the Riksdag, calls for a low and stable is primarily concerned with the risk of problems rate of infl ation. This provides good prerequi- in the major Swedish commercial banks and the sites for favourable, sustainable economic central fi nancial infrastructure, since they are growth. considered to be crucial for the stability of the The Riksbank has defi ned its price stability system as a whole. Financial stability is also es- objective in terms of limiting infl ation (the rate sential if the Riksbank is to maintain price sta- of price increases) to 2 per cent per year, as bility.

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