BANK OF FINLAND ANNUAL REPORT 2010 Bank of Finland Annual Report 2010 Bank of Finland Annual Report 2010 Bank of Finland Established 1811 Street address Snellmaninaukio, Helsinki Postal address PO Box 160, FI-00101 Helsinki Finland Telephone national 010 8311 international +358 10 8311 Fax +358 9 174 872 SWIFT SPFB FI HH E-mail [email protected] [email protected] Internet www.suomenpankki.fi/en Regional offices Vantaa Turvalaaksontie 1, Vantaa, PO Box 160, FI-00101 Helsinki Telephone +358 10 8311 Kuopio Puutarhakatu 4, PO Box 123, FI-70101 Kuopio, Telephone +358 10 8311 Drafted in accordance with Oulu Section 19 of the Act on Kajaaninkatu 8, the Bank of Finland. PO Box 103, FI-90101 Oulu, The figures in the Annual Report Telephone +358 10 8311 are based on data available in February–March 2011. Tampere Koskikatu 9 C, ISSN-L 1239-9345 (print) PO Box 325, ISSN 1456-579X (online) FI-33101 Tampere, Edita Prima Oy Telephone +358 10 8311 Helsinki 2011 2 Bank of Finland Annual Report 2010 Contents Bank of Finland ....................................................................................................................................5 Foreword ....................................................................................................................................................7 Bank of Finland’s strategy ..........................................................................................................9 Bank of Finland activities 2010 ..........................................................................................13 Monetary policy and economic policy .....................................................................13 Bank of Finland – contribution to preparation of monetary policy .............................................................................................................13 ECB’s monetary policy in 2010 ...............................................................................13 ECB Governing Council’s statements on other economic policy issues ....................................................................................................21 The Bank of Finland and economic policy in Finland ..........................25 Research ......................................................................................................................................27 Banking operations ..................................................................................................................32 Implementation of monetary policy in the euro area and in Finland .........................................................................................................................32 Payments .....................................................................................................................................41 Bank of Finland investment activities..................................................................43 Investment risks and risk management ..............................................................48 Total financial risks in banking operations ....................................................51 Financial markets and statistics .....................................................................................54 Stability and efficiency of the financial system ...........................................54 Statistics ......................................................................................................................................58 Maintenance of currency supply ...................................................................................60 Growth in euro banknotes issued in Finland and the euro area .................................................................................................................61 Bank of Finland developed its cash depot system .....................................62 Gradual progress in harmonisation of currency supply throughout euro area .......................................................................................................63 A downturn in counterfeit banknotes in the euro area, but more counterfeits found in Finland ............................................................63 Other operations ........................................................................................................................65 International operations ...........................................................................................65 Communications ............................................................................................................72 Management and organisation ...........................................................................................76 Management system ................................................................................................................76 Action planning...........................................................................................................................77 Objectives and results framework ...............................................................................77 Risk management within corporate governance ..............................................78 Personnel ..........................................................................................................................................84 Budget and operative costs ................................................................................................87 Environment ..................................................................................................................................90 Bank of Finland Annual Report 2010 3 Financial statements ......................................................................................................................93 Balance sheet .................................................................................................................................94 Profit and loss account ..........................................................................................................96 Appendices to the financial statements ....................................................................97 Accounting conventions .......................................................................................................99 Notes on the balance sheet .............................................................................................103 Notes on the profit and loss account .....................................................................111 Notes on risk management .............................................................................................119 Auditors’ report .......................................................................................................................122 Statement regarding the audit as defined in Article 27 of the statute of the European System of Central Banks and the European Central Bank ............................................................................................123 Appendices ..........................................................................................................................................124 Monetary policy measures of the Eurosystem in 2010 ............................124 Key measures affecting the financial markets in 2010 .............................125 Main opinions issued by the Bank of Finland 2010 ..................................133 Bank of Finland publications ........................................................................................135 Supplementary tables...........................................................................................................137 Organisation of the Bank of Finland ......................................................................151 4 Bank of Finland Annual Report 2010 Bank of Finland The Bank of Finland is the fourth oldest economic growth and sound employment. central bank in the world. It was founded As a promoter of financial stability, the in 1811 and initially mainly functioned Bank of Finland is an influential as a banknote exchange office, credit participant in the public debate on Finnish institution and as the government’s cashier. economic policy. TThese days, the Bank of Finland is In addition to monetary policy Finland’s monetary authority and an active preparation and monitoring of financial member of the European System of market stability, the core functions of the Central Banks (ESCB). The Bank’s Bank of Finland include operational activities are regulated by the Statute of central bank tasks in connection with the ESCB and the Act on the Bank of payments, the implementation of Finland. The objectives of the Bank of monetary policy and the maintenance of Finland’s operations are to promote price currency supply. stability as well as stability and efficiency The Governor of the Bank of in payment and financial systems and Finland is a member of the Governing thereby create the framework for Council of the European Central Bank Board of the Bank of Finland. From the left: Pentti Hakkarainen, Deputy Governor, Erkki Liikanen, Governor of the Bank of Finland and Seppo Honkapohja, Member of the Board. Photo: Pekka Karhunen. Photo: Pekka Bank of Finland Bank of Finland Annual Report 2010 5 and thereby participates in the decision- appointed but rather that there would be making process affecting the entire a reassignment of the Board’s tasks. Eurosystem, as an independent and The Bank of Finland has operated impartial decision-maker. Experts from under