In this work, all of the public authorities use the National Institute of Economic Research’s forecasts for economic developments. 8  BIS central bankers’ speeches  The Riksbank’s profits and dividends 1988–2018 SEK billion  Sources: The National Institute of Economic Research and the Riksbank  This development is not unique to the Riksbank. Many of those who have invested in bonds will face losses when interest rates rise. Those that are hit the hardest will be the central banks that have applied what is known as quantitative easing in recent years, that is, they have bought large volumes of bonds with long maturities to stimulate the economy. The fact that the Riksbank makes losses in turn means that the bank will not be able to pay dividends to the government for some years. As the dividend payment is based on the results from the past five years, it will decline with a time lag, and the forecast at the moment is that we will pay two further dividends before the losses take over and the dividend payments become zero. This is of course a setback for the government’s income. And as the dividends cannot be negative when the Riksbank makes a loss, the bank must bear the losses, which will reduce our equity. As we have equity of a good SEK 100 billion, we can manage this without any infringement of our financial independence. The Riksbank is financially strong I have now described how the Riksbank’s balance sheet has changed over the past ten years.

The benefits of integrated supervision rest on the synergies between banking supervision and monetary policy given that banks play the crucial role in monetary policy transmission mechanism. In such a context, the supervisory information regarding the individual banks’ health can be highly beneficial to central banks in enhancing monetary policy effectiveness. On the other hand, expanding the central bank’s mandate with additional tasks may pose challenges with respect to central bank governance. As noted by Georgsson et al. (2015) the broader the mandate a central bank has, the more often it will be forced to find a balance between different objectives, tasks and tools. Studying the implications of financial stability tasks on central bank governance, BIS (2009) underlines the need for effective governance arrangements that should be designed to deliver sustainable conduct of monetary policy functions in combination with the additional mandate to contribute to financial stability. Further, the Report stresses the importance of clarity with respect to financial stability responsibilities, policy transparency as to promote accountability, full autonomy to safeguard against political pressures and undue influence from business and industry and close collaboration with other regulators in the country. Another important aspect is the central bank balance sheet which should be sound enough with strengthened risk-bearing capacity to enable successful implementation of monetary policy and support financial stability in case of emergency. Going back to banking supervision, besides the institutional setup, another important question raised by the crisis relates to the role of transparency and accountability in promoting more effective banking supervision.