The Riksbank’s balance sheet

The Riksbank’s financial assets and liabilities

Gold and foreign exchange reserves – the Riksbank’s largest asset

The Riksbank manages financial assets to ensure that it can fulfil the inflation target and perform its tasks. The greater part of the assets is made up of the gold and foreign currency reserves. This ensures that the Riksbank, if necessary, can supply temporary liquidity support in foreign currency and intervene in the foreign exchange market. The foreign exchange reserve mostly consists of debt securities in foreign currencies with high liquidity and low credit risk, primarily government bonds.

Another large share of the assets consists of securities in Swedish kronor purchased for monetary policy purposes. In 2015, the Riksbank began buying Swedish government bonds to counteract the low level of inflation. After the outbreak of the coronavirus pandemic, the Riksbank also bought other Swedish securities to support the economy and counteract problems in the financial markets. As from January 2023, the Riksbank no longer buys securities in Swedish kronor. From April 2023, the Riksbank has instead sold Swedish government bonds. As the Riksbank’s holdings of securities mature and are sold off, they will decline as a proportion of the Riksbank’s total assets.

Assets also include claims on the International Monetary Fund (IMF). Part of the Riksbank’s receivables from the IMF is the holding of special drawing rights (SDR) and the remaining receivables consist of loans to the IMF. The Riksbank’s other assets consist of the Riksbank’s premises at Brunkebergstorg, shares in the Bank for International Settlements (BIS) and other holdings.

The banks’ placements in monetary policy instruments – the Riksbank’s largest liability

The Riksbank’s financial liabilities mostly consist of the banking system’s claims in Swedish krona on the Riksbank. This is mainly because the Riksbank borrows Swedish kronor from the banking system to finance its holdings of Swedish and foreign securities. When the banks’ total claims exceed their total liabilities in Swedish kronor to the Riksbank, the banking system has a liquidity surplus with regard to the Riksbank. This has been the case for the banking system since 2008. Banks that are monetary policy counterparties to the Riksbank may deposit the liquidity surplus with the Riksbank via two different monetary policy instruments – either in a standing deposit facility overnight or in Riksbank Certificates with a maturity of one week. These deposits increased significantly in the years when the Riksbank bought Swedish securities. Through the purchases, the Riksbank has added a large amount of liquidity to the banking system and thereby increased the banks’ liquidity surplus towards the Riksbank. As the securities now mature and are sold off, the banking system’s liquidity surplus decreases and thus so do the banks’ deposits with the Riksbank.

The Riksbank also has a liability to the IMF corresponding to the value of the SDR the Riksbank has been allocated by the IMF. In addition, the Riksbank has a liability to the Swedish National Debt Office consisting of foreign currency that the Debt Office has borrowed to fund parts of the Riksbank’s lending to the IMF.

The Riksbank issues the banknotes and coins that are used in Sweden. The value of banknotes and coins in circulation is reported as a liability on the balance sheet.

Profits and losses - The Riksbank’s capital

The Riksbank’s profits can be used to build up equity and risk buffers. Any profits when equity and buffers are sufficiently large are distributed to the state. Profits that have not yet been realised are offset against so-called revaluation accounts (read more about revaluation accounts and the Riksbank’s accounting rules in the Riksbank's Annual Report). The profit retained by the Riksbank has been aggregated over the years and forms the Riksbank’s equity.

Equity can be considered as a liability to the Swedish state as the state owns the Riksbank. When the Riksbank makes a profit, equity increases, and a loss causes it to decrease. As the state does not have an explicit required return from the Riksbank, equity can be seen as interest-free capital (interest-free liability) for the Riksbank, just like banknotes and coins. The capital and outstanding cash thereby together constitute an interest-free liability that benefits the Riksbank’s average earnings that should cover the current costs of enabling the Riksbank to carry out its tasks and should also generate a profit. In this way, the Riksbank can build up a buffer and create financial independence.

The Sveriges Riksbank Act (read more about the new Sveriges Riksbank Act, which came into force on 1 January 2023, at "The Riksbank Act") regulates how both losses and profits are to be handled. If the sum of equity and unrealised gains on revaluation accounts, except the account for gold, is too low, the Riksbank may request more capital from the central government. This will restore the Riksbank’s capital to a level that ensures financial independence. The Riksbank also has the option of using profits for risk provisions, which allows the Riksbank to build up an extra buffer in advance against risks of future losses.

A central bank is, financially speaking, a very resilient institution because it can always pay for itself in its own currency. A central bank can therefore operate as usual with low or even negative equity for a period, as recent examples show (read more about these in the Riksbank's Staff Memo). Over a longer period, however, it is important for financial independence that the Riksbank has sufficient capital to protect and maintain sufficient earnings and the ability to self-finance. The Riksbank’s financial independence is an important part of its independence in a broader sense. The independence of a central bank is fundamentally important for creating confidence in the inflation target and monetary policy, but also for other tasks that the central bank has. Thus, in addition to financial independence, it needs to have political and operational independence backed by the law.