Årsredovisning 2009 Annual Report 2009 SVERIGES RIKSBAN K SVERIGES RIKSBANK – ANNUAL REPORT 2009 2 ■ The tasks and role 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 system. Maintaining the value of The Riksbank’s independence money – price stability The Riksbank is a public authority under the Under the Sveriges Riksbank Act the Riksbank Riksdag. The Riksdag appoints the members shall maintain price stability or, in other words, of the Riksbank’s General Council. The Gen- ensure that inflation is low and stable. This eral Council in turn appoints the members of provides a sound basis for favourable and the Riksbank’s Executive Board. The General sustainable growth. Council also supervises and scrutinises the The Riksbank has specified an inflation target work of the Executive Board. according to which the annual change in the The Riksdag has given the Riksbank an inde- consumer price index (CPI) is to be 2 per cent. pendent status. This means that the Executive A tolerance interval of ±1 percentage point Board of the Riksbank makes the monetary has been set around this target to underline policy decisions without instruction from the fact that it is not always possible to attain any other parties. By delegating the task of the inflation target exactly. maintaining inflation at a low and stable level The Riksbank determines the level of its policy to the Riksbank, the Riksdag has ensured interest rate, the repo rate, to influence infla- that monetary policy is based on a long-term tion. The repo rate affects other interest rates perspective and that there is a sound basis for in the economy and ultimately economic the credibility of the inflation target. activity and inflation. Transparency and communication A safe and efficient payment The Riksbank attaches great importance to system – financial stability being open and clear about the bank’s activi- ties. A wide range of external parties must be The Riksbank has the Riksdag’s mandate to able to understand what the bank does and promote a safe and efficient payment system. why. This increases the credibility of the infla- This means that the Riksbank shall act to pro- tion target of 2 per cent, thus making it easier mote stability in the Swedish financial system for monetary policy to be effective. Openness as a whole. The mandate also includes issuing and clarity also create confidence in how the banknotes and coins. In addition, the Riksbank Riksbank assesses and handles the situation provides a system that handles large payments on the financial markets. The independent between banks and other actors in a safe and status of the Riksbank also places great efficient way. demands on the transparency of the bank’s The Riksbank analyses the stability of the activities so that they can be examined and SVERIGES RIKSBANK – ANNUAL REPORT 2009 financial system on a continuous basis in evaluated. order to detect, at an early stage, changes Openness is apparent, for example, in the fact and vulnerabilities that could lead to disrup- that the Riksbank publishes minutes and back- tions. The analysis focuses primarily on the ground material from the meetings of the major Swedish banks, the functioning of Executive Board, as well as the minutes of the the financial markets and the infrastructure monetary policy meetings, on its website. The required for an efficient payment system. In macroeconomic models that the Riksbank uses a crisis situation, the Riksbank may in certain in its analyses are also public. circumstances provide temporary liquidity assistance to banks. 3 ■ Contents INTRODUCTION 6 Statement by the Governor 6 The year at a glance 8 ADMINISTRATION REPORT 10 Maintaining the value of money – price stability 10 A safe and efficient payment system 20 Asset management 32 Organisation and management 40 Employees 44 Governance 45 BALANCE SHEET AND PROFIT AND LOSS ACCOUNT 50 Accounting policies 50 Balance sheet 52 Profit and loss account 54 Cash flow statement 55 Notes 57 The Riksbank’s profit and loss account and balance sheet by function 65 Five-year overview 68 Proposal for the allocation of profits for 2009 71 Audit report for Sveriges Riksbank 72 OTHER ITEMS 73 The Riksbank’s consultation work 73 Publications 75 The Sveriges Riksbank’s Prize in Economic Sciences in memory of Alfred Nobel 2009 76 Glossary 77 SVERIGES RIKSBANK – ANNUAL REPORT 2009 5 INTRODUCTION ■ Statement by the Governor 2009 was a turbulent year. It was a year in which the international financial crisis held the Swedish economy in its grip. A dramatic year, which, despite vigorous measures by central banks and other authorities around the world, was characterised by the worst economic recession for many decades. There were signs of a recovery during the latter part of the year, although there was still a lot of uncertainty about the future course of development and the road ahead was lined with risks. Events continued to make great demands on the operations of the Riksbank. This did not, however, stop our endeavours to carry out all our tasks as well and as effectively as possible – to maintain a high level of confidence and live up to our vision of being “among the best”. After the international financial turmoil of Sep- level for a fairly long period. To further strengthen tember 2008 had escalated into a global crisis it the impact of monetary policy we used supple- was necessary in many quarters to dig considerably mentary measures to secure the supply of loans deeper than usual in economic policy toolboxes. in the economy and try to bring down the general This was also true of the Riksbank. level of interest rates even more. We then offered loans to the banks for a term of almost a year at a Extraordinary measures in the wake of the crisis fixed rate of interest, with the aim of contributing The financial crisis continued in 2009 and we to lower interest rates on loans to companies and needed to find new ways to recreate confidence in households. The offer was later repeated twice; in the financial markets, maintain financial stability September and October. and mitigate the negative effects of the crisis on the economy. It was necessary to take some extraordin- Flexible collaboration between all activities ary measures – measures in addition to the policy All these measures meant that the financial system we would probably have pursued under more nor- started functioning better and that the mechanisms mal circumstances. through which the Riksbank can influence the real When the crisis hit Sweden in earnest we used new economy and inflation were normalised. This illus- tools to get the financial markets to function better, trates clearly that the dividing lines between our increase the credit supply and try to bring down the activities are not rigid and that these activities can- various interest rates and risk premiums that were not be conducted independently of each other. This hampering the effectiveness of monetary policy in becomes particularly evident during crises of the the economy. We started to lend both kronor and type we are experiencing right now. In 2009 too, the US dollars to the banks at longer maturities than interplay between the Riksbank’s macroeconomic normal. With the help of these loans the Swedish assessments and our stability analysis was crucial in banks could more easily and effectively manage enabling our actions to alleviate the effects of the to fund their operations in the short and medium crisis on the economy. This was only possible thanks term. To enable us to lend US dollars to the banks, to flexible collaboration between our activities, on two occasions we prolonged our swap agree- particularly those that focus on monetary policy, ment with the Federal Reserve. We increased the financial stability and the operative management foreign currency reserve to a level that allowed us of the Riksbank’s assets. to improve our preparedness to safeguard stability Our work in managing the effects of the financial in the financial markets. Increasing the foreign cur- crisis was not, however, restricted only to these three rency reserve by borrowing via the Swedish Nation- areas. We acted both in the international arena al Debt Office proved to be more difficult than and internally in the Riksbank to safeguard the expected, so we also made temporary use of our prerequisites for carrying out monetary policy and swap agreement with the European Central Bank stability analysis well. Among other things, we con- (ECB). Besides this, we continued to accept several tinued our strong commitment to the International types of security as collateral when banks borrowed Monetary Fund (IMF) and the EU framework for money from the Riksbank. We also extended, on strengthening banking sector regulation as regards various occasions, the circle of our monetary policy supervision, capital adequacy and risk manage- counterparties to enable more financial market ment. At the same time, our swap agreements with participants to borrow from the Riksbank, thereby the central banks of Iceland, Estonia and Latvia enabling them to manage their liquidity and fund- supplemented the financial support measures from ing more easily. the IMF and the EU, with the intention of alle- Moreover, during the year we cut the repo rate to its viating economic problems in our neighbouring lowest level ever since the introduction of the infla- countries. We also started our preparations for con- tion target – 0.25 per cent – and communicated necting our own statistical activities to the ECB’s our belief that the repo rate would remain at that centralised securities database, which will more SVERIGES RIKSBANK – ANNUAL REPORT 2009 6 INTRODUCTION awarded the Plain Swedish Crystal, a prize awarded to authorities that use clear and understandable language in their texts.