EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 24 Ju ly 2013 
on the financial independence of Sveriges Riksbank  
(CON/201 3/53) 
 
Introduction and legal basis  
On 2 2 April  2013, the European Central Bank (ECB) received a request from the Swedish Ministry of 
Finance fo r an opinion on a proposals from the C ommission of inquiry into the financial independence of 
Sveriges Riksbank (SOU 2013:9) (hereinafter the ‘report ’). 
The ECB’s competence to deliver an opinion is based on Articles  127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article  2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions1, as the report  and its proposals  relate to rules applicable to Sveriges Riksbank . In 
accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion. 
 
1.  Background  
1.1 The ECB has repeatedly  pointed out in its Convergence Reports that Sweden needs to adapt its  
legislation governing Sveriges Riksbank in order to comply with Treaty  requirements related to, 
inter alia , financial independence and profit distribution. In March 2008,  the ECB receiv ed a 
request from the Swedish Ministry of Finance for an opinion on a report entitled ‘The Riksbank’s 
financial independence’ (SOU 2007:51). One of the main goals of that report was to propose legal  
changes necessary to address the shortcomings identified by the ECB.  The report set out two 
alternative proposals for amendments to the Law on Sveriges Riksbank regarding  changes to 
Sveriges Riksbank’s capital structure and profit distribution.  
1.2 On 4  August 2008, the ECB issued O pinion CON/2008/342 where , inter alia , it underlined that 
Member States with a derogation who do not yet participate in economic and monetary union have 
a legal duty to adapt the statutes of their national central banks ( NCBs ) to ensure compatibility with 
the Treaty and the Statute of the European System of Central Banks and of the European Central 
Bank (hereinafter the ‘Statute of the ESCB’). It also concluded that any legislative reform should 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2  All opinions are published on the ECB’s website at www.ecb.europa.eu.  
ECB -PUBLIC 
2 aim to gradually achieve consistency with Eurosystem standards and that neither of the two 
alternatives presented were sufficient to ensure Sveriges Riksbank’s financial independence.  
 
2.  The 2013 proposals from the Commission of inquiry  
2.1 Due to the financial cris is none of the proposals contained in SOU  2007:51 were implemented ; 
instead the experiences of the crisis provided a reason to examine the same issues afresh.  
Consequently , on 13 October  2011 the Swedish Government instructed the Commis sion of inquiry  
to investigate how the experiences of the financial crisis have influenced views of  Sveriges 
Riksbank’s balance sheet  (Dir 2011:89).  
In the brief to the Commission of inquiry  the Government instructed it specifically  to determine : 
(a) how large Sveriges Riksbank’s foreign reserves should be and how those reserves  should be 
financed ; 
(b) the best method for coordination between Sveriges Riksbank  and the Swedish National Debt 
Office ; 
(c) the procedure to be carried out when  borrowing for foreign reserves , taking account of the 
overall aim to guarantee effective borrowing by Sweden  and safeg uard public finances, as 
well as ensur e financial stability and protect Sveriges Riksbank’s independence;  
(d) what the  appropriate amount  for Sveriges Riksbank’s own capital  should be . 
2.2 The Commission of inquiry  issued the r eport in January 2013. Therefore, this is  the second ECB 
consultation on similar issues and has to be read in conjunction with Opinion CON/2008/34. The 
report  contain s a number of proposals on which the ECB provides its opinion:  
(a) Sveriges Riksbank’s interest free capital should be SEK  75 billion, including SEK  30 billion 
in equity capital. The capital is to be protected against inflation and restored after losses ; 
(b) Sveriges  Riksbank should be given the right to increase its foreign currency reserves so that 
its borrowed and interest -free capital can reach  SEK 200 billion ; 
(c) In the event that  Sveriges Riksbank used its reserves for emergency liquidity assistance,  it 
should be given the right to restore its foreign currency reserves by borrowing to the required 
extent, without limits ; 
(d) Sverige s Riksbank sh ould be given the right to finance its lending in foreign currency by 
borrowing to the extent required, without limits. This would ensure a sufficient supply of 
emergency liquidity to banks in distress when financial stability is threatened ; 
(e) The costs of the borrowed part of the foreign currency reserves should be covered by fees on 
banks. The proposal suggests that banks lend ing and borrow ing in foreign currency should 
ECB -PUBLIC 
3 be required to take part in a mandatory insurance scheme that guarantees  emergency 
liquidity assistance in foreign currency ; 
(f) The currency risk arising  from holding foreign currency reserves should be eliminated by 
transferring it  to the Swedish National Debt Office.  With regard to the amount of Sveriges 
Riksbank’s equity capital  proposed by the Commission of inquiry , the report points out that 
the proposed amount is based on the assum ption that any foreign currency risk as a result of  
holding the  currency reserves has be en hedged;  
(g) With these proposals l ess capital will be tied up in the Sveriges Riksbank , resulting in social 
economic gains.  Transferring the foreign currency risk to the Swedish National Debt Office 
would result in a decreased need for equity capital at Sveriges Riksbank. The report argues 
that due to the end of Sveriges Riksbank’s borrowing in foreign currency, its  balance sheet 
would be reduced by SEK 90- 215 billion . If foreign currency borrowings came to  
SEK  90 billion in ‘normal times’, the savings would be between  SEK 180 and 270 million 
per year.  
 
3.  General ob servations  
The ECB underlines that all observations made in O pinion CON/2008/34 are still valid.  
3.1 In Chapter  10 of the report , entitled  ‘Consequences of the commission of inquiry’s draft bill ’ it is 
noted that as a result of the  proposed legal changes , Sveriges  Riksbank’s share capital and reserves 
would be considerably reduced, which would open up the  possibility for SEK 73  billion to be 
transferred from Sveriges  Riksbank to the Government  by way of a special distribution. It 
explicitly states that government debt will fall by SEK  73 billion, or approximately  2% of GDP, as 
a result of the reduction in share capital and reserves. It further specifies that the capital held by  
Sveriges  Riksbank w ould be released and could  be used to amortise government debt . 
3.2 Under Article 130 of the Treaty and Article 7 of the Statute  of the ESCB , central banks are 
independent , which also includes financial independence, and points out the general principle of 
monetary financing prohibition, which states that no profit distribution should be effected outside 
the regular profit distribution scheme. These concerns will be addressed below.  
3.3 The monetary financing prohibition is laid down in Article  123(1) of the Treaty, which prohibits 
overdraft facilities or any other ty pe of credit facility with the ECB or the NCBs of Member States 
in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or 
other public authorities, other bodies governed by public law, or public undertakings of M ember 
States, and the purchase directly from these public sector entities by the ECB or NCBs of debt 
instruments. The precise scope of application of the monetary financing prohibition is further 
clarified by Council Regulation (EC) No 3603/93 of 13 Decemb er 1993 specifying definitions for 
ECB -PUBLIC 
4 the application of the prohibitions referred to in Articles  104 and 104b(1) of the Treaty3, which 
makes it clear that the prohibition includes any financing of the public sector’s obligations vis- à-vis 
third parties.  
3.4 The distribution of central bank profits that  have not been fully realised, accounted for and audited 
does not comply with the monetary financing prohibition. 
To comply with the monetary financing prohibition, the amount distributed to the State budget 
pursuant to the applicable profit distribution rules cannot be paid, even partially, from the NCB’s 
reserve capital. Therefore, profit distribution rules should leave the NCB’s reserve capital  
unaffected . Moreover, when NCB assets are transferred to the State, they must be remunerated at 
market value and the transfer should take place at the same time as the remuneration4. 
3.5 Further, a Member State may not impose reductions of capital on an NCB without the ex ante 
agreement of the NCB’s decision -making bodie s, which must aim to ensure that it retains sufficient 
financial independence  to fulfil its mandate under Article 127(2) of the Treaty and the Statute of 
the ESCB as a member of the ESCB.  For the same reason, any amendment to the profit distribution 
rules of an NCB should only be initiated and decided in cooperation with the NCB, which is best 
placed to assess its required level of reserve capital5. As regards financial provisions or buffers, 
NCBs must be free to independently create financial provisions to  safeguard the real value of their 
capital and assets. Member States may also not hamper NCBs from building up their reserve capital 
to a level which is necessary for a member of the ESCB to fulfil its tasks6. 
3.6 Sweden is a Member State with a derogation  and must therefore comply with all adaptation 
requirements under Article 131 of the Treaty. The ECB notes that the Treaty has obliged Sweden to adopt national legislation for integration into the Eurosystem since 1 June 1998. All legislative 
action taken by the Swedish authorities in regard to legislation concerning Sveriges Riksbank 
should bring the legislation in line with the Treaty requirements.  
 
4.  Specific observations  
Below are observations on the specific draft amendments proposed to the Sveriges Riksbank Act 
(1988:1385).  
4.1 Amendments proposed to Chapter  10, Article  1 
4.1.1  Article  1 states that Sveriges Riksbank ’s financial independence will be guaranteed by the fact that 
it has been granted the right to issue notes and coins and furthermore, that it has its share capital 
and reserves.  
                                                 
3  OJ L 332, 31.12.1993, p. 1. Articles 104 and 104b(1) of the Treaty establishing the European Community are now 
Articles  123 and 125(1) of the Treaty on the Functioning of the European Union.  
4  Opinions CON/2011/91 and CON/2011/99.  
5  Opinion CON/2009/83 and Opinion CON/2009/53.  
6  Opinion CON/2009/26.  
ECB -PUBLIC 
5 4.1.2  The ECB notes that the right to issue banknotes and coins is not in itself a guarantee of financial 
independence. The article does not take into account obligations of an NCB under Article 128(1) of 
the Treat y and Article  16 of the Statute  of the ESCB , and as such is not compliant with Sweden’s 
obligations under the Treaties.  
4.1.3  The ECB would also like to point out, as already mentioned in Opinion CON/2008/34, that 
banknotes in circulation should not be vie wed as cost -free capital. This view is not supported by 
the Treaty, which does not state that euro banknotes are conceptually equivalent to cost -free capital 
owned by any individual NCB. 
4.2 Amendments proposed to Chapter  10, Article s 2, 3 and 4 
4.2.1  Article 2 states that if Sveriges Riksbank ’s cost -free capital falls below the target level , the bank 
will receive a capital contribution. According to the proposals from the Commission of inquiry, the 
total interest free capital is composed of : (a) bills and coins in circulation;  and ( b) equity capital. 
The latter will come to a total of SEK  30 billion . Losses smaller than SEK 10  billio n are to be 
compensated by withholding profits until the equity capital is restored. Larger losses will require 
the restoratio n of equity capital by injectin g new equity capital.  The ECB notes that if a third party 
has the power to determine or influence the restoration of Sveriges Riksbank´s equity capital , it 
would be incompatible with financial independence.  
4.2.2  The ECB has stated in its Convergence Reports that with regard to profit allocation, an NCB’s 
statute may prescribe how its profits are to be allocated. In the absence of such provisions, 
decisions on the allocation of profits should be taken by the NCB’s decision- making bodies on 
professional grounds, and should not be subject to the discretion of third parties unless there is an express safeguard clause stating that this is without prejudice to the financial independence  
necessary for carrying out the NCB’s ESCB -related tasks as well as national tasks.  This means that 
such decisions with regard to the profit allocation of Sveriges  Riksbank should be made by the 
Executive Board.  
4.2.3  Profits may be distributed to the State budget only after any accumulated losses from  previous 
years have been covered and financial provisions deemed necessary to safeguard the real value of 
the NCB’s capital and assets have been created. Temporary or ad  hoc legislative measures 
amounting to instructions to the NCBs in relation to the dis tribution of their profits are not a llowed . 
Against this background, the ECB notes that the  profit distribution scheme for Sveriges Riksbank 
has not been improved, as the proposed Article 10 (6), as well as the proposed Article 10( 7), 
continue to give a dec isive role to the Swedish Parliament as well as the National Audit Office.  
4.2.4  Concerning the powers of the Swedish Parliament and National Audit Office, it is incompatible 
with financial independence, if a third party has the power to determine or influ ence Sveriges 
Riksbank ’s budget, unless the law provides a safeguard clause so that such a power is without 
prejudice to the financial means necessary for carrying out Sveriges Riksbank’ s ESCB  and 
national -related tasks.  
ECB -PUBLIC 
6 4.3 Amendments proposed to Chapter  10, Article  6 
4.3.1  Sveriges Riksbank ’s accounts should be drawn up either in accordance with general accounting 
rules or in accordance with rules specified by  Sveriges Riksbank ’s Executive Board . If, instead, 
such rules are specified by third parties, the se accounting  rules must at least take into account what 
the NCB’s independent decision- making bodies ha ve proposed. The annual accounts should be 
adopted by Sveriges Riksbank ’s Executive Board , assisted by independent accountants, and may be 
subject to ex post approval by third parties , e.g. the government or parliament. Sveriges Riksbank ’s 
Executive Board  should be able to decide on the calculation of the profits independently and 
professionally.  
4.3.2  ECB legal instruments on accounting do not yet apply to Sveriges Riksbank pursuant to Article 139 
of the Treaty and Article 42 of the Statute  of the ESCB . However , Sveriges Riksbank should be 
equipped with the power to adopt its own accounting guidelines , which take inspiration from the 
ECB Guidelines , until  the day when Sweden’s  derogation will be abrogated.  
4.4 Amendments proposed to Chapter  12, Articles  1 to 3 
4.4.1  According to the report , one of Sveriges Riksbank ’s tasks is to provide emergency liquidity 
assistance in foreign currency to Swedish banks an d other financial institutions. In order to fulfil 
this task, Sveriges Riksbank is to be given the right to increase its foreign currency reserves when 
needed, so that the total of interest -free and borrowed capital may reach up to SEK 200 billion. 
This limit is to be indexed to the GDP in current prices. 
4.4.2  The proposed amendments restrict Sveriges Riksbank’s right to independently decide to strengthen 
the foreign currency reserve. Sveriges Riksbank ’s Executive B oard must have the right to instruct 
the Swedish National Debt Office to borrow whatever amount it considers necessary . 
4.4.3  The proposed amendments lack clarity  and entail the risk to be non-complian t with the basic tasks 
of the ESCB , such as conduct ing foreign  exchange operations, and holding  and manag ing the 
official foreig n reserves of the Member States.  
4.4.4  If an NCB is made subject to a National Debt Office control on managing its foreign reserves, it 
would undermine the second and third indents of Article 127(2) of the Treaty , second and  third 
indents of Article 3.1 of the Statute  of the ESCB , as well as Articles 23, 30 and 31 of the Statute  of 
the ESCB . Although Member States with a derogation are exempt from the above Articles as set 
forth in Article 139 of the Treaty and Article 42.1 of the Statute  of the ESCB , as required by 
Article 131 of the Treaty, they have a legal duty to adapt the statutes of their NCBs to ensure 
compatibility with the Treaty and the Statute  of the ESCB  in respect of Eurosystem -related tasks’.7  
4.4.5  If decision s of Sveriges Riksbank are made depend ant on the decisions of a national parliament, 
this is undermining Article 130 of the Treaty and Article 7 of the Statute  of the ESCB . 
 
                                                 
7  Convergence Report June 2013, p. 41.  
ECB -PUBLIC 
7 This opinion will be published on the ECB’s website.  
 
 Done at Frankfurt am Main, 24 July  2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI