Annual Report 2010 2 SVERIGES RIKSBANk – ANNUAL REPORT 2010 n The tasks and roll of the Riksbank The Riksbank is Sweden’s central bank and a public authority that reports to the Riksdag (the Swedish parliament). The Riksbank is responsible for conducting Swedish monetary policy, with the objective of maintaining price stability. The Riksbank is also entrusted with the task of promoting a safe and efficient payment mechanism. Maintaining the value of money – The Riksdag has given the Riksbank independ- price stability ent status. This means that the Executive Board of the Riksbank makes monetary policy decisions Under the Sveriges Riksbank Act, the Riksbank without instruction from any other parties. By shall maintain price stability, which means that delegating the task of maintaining inflation at a inflation should be low and stable. This pro- low and stable level to the Riksbank, the Riksdag vides a sound basis for favourable and sustain- has ensured that monetary policy is based on a able growth. The Riksbank has specified an long-term perspective and that there is a sound inflation target according to which the annual basis for the credibility of the inflation target. change in the consumer price index (CPI) is to be 2 per cent. The Riksbank’s independent status is also re- flected in its financial independence, guaranteed The Riksbank determines the level of its policy through its right to manage financial assets. The interest rate, the repo rate, to influence infla- Riksbank manages financial assets primarily to tion. The repo rate affects other interest rates ensure that it can fulfil its statutory objective in the economy and ultimately economic activ- and perform its tasks. On the basis of this, asset ity and inflation. management concentrates on achieving as high a long-term return as possible in relation to the risk A safe and efficient payment taken. mechanism – financial stability The Riksbank has the Riksdag’s mandate to Transparency and communication promote a safe and efficient payment mecha- The Riksbank attaches great importance to being nism. This means that the Riksbank shall act open and clear about the bank’s activities. A wide to promote stability in the Swedish financial range of external parties must be able to under- system as a whole. The mandate also includes stand what the bank does and why. This increases issuing banknotes and coins. In addition, the the credibility of the inflation target of 2 per cent, Riksbank provides a system, RIX, which han- thus making it easier for monetary policy to be dles large payments between banks and other effective. actors in a safe and efficient way. Openness and clarity also create confidence in The Riksbank analyses and supervises the how the Riksbank assesses and handles the situ- stability of the financial system on a continu- ation on the financial markets. Openness and ous basis in order to detect, at an early stage, clarity in the Riksbank’s assessments of financial changes and vulnerabilities that could lead to stability is one of several conditions that enable disruptions. The analysis focuses primarily on economic agents to form an opinion of the risks in the major Swedish banking groups, the func- the financial system, and to act accordingly. tioning of the financial markets and the finan- cial infrastructure required for the payments The independent status of the Riksbank also SVERIGE to function smoothly. In a crisis situation, the places great demands on the transparency of the Riksbank may in certain circumstances provide bank’s activities, so that they can be examined S temporary liquidity assistance to banks. and evaluated. Openness is apparent, for ex- RIK S ample, in the fact that the Riksbank publishes BANk – The Riksbank’s independence on its website minutes and background material from the meetings of the Executive Board, as well ANN The Riksbank is a public authority under the as the minutes of the monetary policy meetings. U Riksdag. The Riksdag appoints the members A Moreover, the models used by the Riksbank in its L of the Riksbank’s General Council. The Gen- analyses – from macroeconomic forecast mod- RE eral Council in turn appoints the members of PO els to models for stress tests of banks – are also R T 2010 the Riksbank’s Executive Board. The General publicly available. Council also supervises and scrutinises the work of the Executive Board. 3 n Contents THE GENEraL COUNCIL’S ANNUAL REPOrt AND PROPOsaL FOR ALLOcatION OF THE RIKSBANK’S PROFIts FOR 2010 Annual report of the General Council 8 Proposal for the allocation of profits for 2010 11 Transfer calculation of the Riksbank’s profits 2010 12 ANNUAL REPOrt FOR SVERIGES RIKSBANK 2010 INTRODUCTION Statement by the Governor 16 The year at a glance 18 ADMINISTRATION REPORT Maintaining the value of money – price stability 20 A safe and efficient payment system 31 Asset management 44 Organisation and management 52 BALANCE SHEET AND PROFIT AND LOSS ACCOUNT Accounting policies 60 Balance sheet 62 Profit and loss account 64 Cash flow statement 65 Notes 67 The Riksbank’s profit and loss account and balance sheet by function 75 Five-year overview 78 Audit report for Sveriges Riksbank 81 OTHER ITEMS SVERIGE The Riksbank’s consultation work 82 S Publications 83 RIK S The Sveriges Riksbank’s Prize in Economic BANk – Sciences in memory of Alfred Nobel 2010 84 Glossary 85 ANN U A L RE PO R T 2010 5 The General Council’s annual report and proposal for allocation of the Riksbank’s profits for 2010 ANNUAL REpoRT n Annual report of the General Council The General Council consists of eleven members and as many deputies. The members are appointed by the Riksdag, after a general election, for a term of office of four years. The General Council selects from among its number a Chairman and a Vice Chairman. The General Council’s account of activities for 2010 reports that the Council has met on 11 occasions during the year and gives an overall description of the matters discussed and the information the General Council has received at its meetings. The Council’s report also states how it has conducted its controlling function. The members of the General Council until 18 posals, in consultation with the Executive Board, to October 2010 were Johan Gernandt (Chairman), the Riksdag and the Government regarding govern- Leif Pagrotsky (Vice Chairman), Sinikka Bohlin, ment amendments to statutes or other measures in Peter Egardt, Susanne Eberstein, Bo Bernhardsson, its sphere of responsibility. Johan Gernandt, Chairman and Elizabeth Nyström, Anders Flanking, Allan Widman Twice a year the Chairman and Vice Chairman (from 4 March 2010), Kjell Nordström and Ebba Leif Pagrotsky, report to the Riksdag Committee on Finance. Vice Chairman Lindsö. During the same period the dep uties were Pär Nuder, Anne-Katrine Dunker, Carin Lundberg, Stephan Tolstoy, Fredrik Olovsson, Lena Sommestad, Ulla Löfgren, Håkan Larsson, Carl B Hamilton and Ulf Perbo. Since 19 October the General Council consists of the following members: Johan Gernandt (Chairman), Leif Pagrotsky (Vice Chairman), Peter Egardt, Sonia Karlsson, Bertil Kjellberg, Anders Karlsson, Gun Hellsvik, Lena Sommestad, Allan Widman, Peter Eriksson and Anders Flanking. The deputy members are Hans Birger Ekström, Tommy Waidelich, Ulf Sjösten, Ann-Kristine Johansson, Chris Heister, Bosse Ringholm, Ebba Lindsö, Catharina Bråkenhielm, Christer Nylander, Helena Leander and Håkan Larsson. The General Council’s tasks The General Council appoints the members of the Executive Board and decides on their salaries and other terms of employment. It also adopts the Riksbank’s Rules of Procedure and decides on the design of banknotes and coins. The General Council also has the task of regularly monitoring the Riks- bank’s activities and how the Executive Board man- ages its business. One of the ways the General Council can perform its supervisory role is through the Chairman and Vice Chairman having the right to attend and speak at the Executive Board meetings, though not the right to vote or make proposals. The General Council also has an Audit Unit that, among other things, examines how members of the Exec u- tive Board perform their duties and examines the Riksbank’s closing procedures with regard to the T 2010 R calculation of the Riksbank’s profits. The Audit PO Unit’s work is carried out by an external authorised RE L A public accountant. U The General Council submits proposals to the Riks- ANN dag concerning the allocation of the Riksbank’s profits and makes a recommendation to the Riksdag BANk – S with regard to the discharge from liability of the members of the Executive Board. RIK S The General Council submits consultation responses within its field of competence and presents pro­ SVERIGE 8 ANNUAL REpoRT The General Council’s activities in 2010 bility and to minimising the costs to both the economy During the year the General Council held 11 meetings. and consumers. The proposal was that the approach should be broad and include the allocation of roles The General Council made decisions during the year between public authorities and the Riksbank’s tools on the Executive Board’s terms of employment and in the field of financial stability. The Chairman and on the external assignments of the members of the Vice Chairman of the General Council together with Executive Board. The General Council also decided the Governor of the Riksbank wrote an Economic on the nomination to the Riksdag’s Nominations Commentary with reference to the submission to the Committee of a member of the board of the founda- Riksdag. The Com mentary was published on the tion “Riksbankens Jubileumsfond”. Riksbank’s website. Communications to the Riksdag During the year the Executive Board consulted three In 2010 the General Council together with the times with the General Council concerning communi- Executive Board made a submission to the Riksdag on cations to the Riksdag.