chance of error. the second line is the second layer, and provides a view of risk that is independent of the business area ’ s assessment. what is the value - add from having this type of second opinion? to start, while the business has the deepest understanding of its environment, operations, and objectives, the second line offers a perspective based on expertise in risk identification, analysis, and mitigation that is informed by its institution - wide view of operations and risks. this allows the second line to provide unique insights by aggregating risks across business lines, identifying interactions across risk types, and spotting anomalies in risk exposures or risk practices that deserve additional attention. there also may be externalities to actions taken in one business line that have implications for the risk of the institution as a whole ; it is the second line ’ s responsibility to articulate that perspective to senior management. the second line ’ s responsibility for establishing a common framework for risk management creates benefits in terms of both efficiency and effectiveness. the second line is an institution ’ s center of excellence in risk management and is in an ideal position to identify and promulgate best practices and standards. in terms of efficiency, the second line is wellpositioned to collect and analyze risk information coming from all of the business lines, to provide common risk management tools, and to provide guidance to business areas to improve their risk management capabilities. the bank ’ s third line of defense, internal audit, provides assurance to senior management and the board of directors that first and second line risk management and control activities are effective. although i did not say it before, the second line is not fully independent of management. this is because second line risk management ( in our case, the risk group ) is involved in a broad range of management decisions related to the bank ’ s risk controls, and, in terms of reporting lines, i am part of the bank ’ s management committee and report to the bank ’ s president. our audit group, however, provides a fully independent, final layer of defense. internal audit does not participate in management decisions, and our general auditor reports to the chair of the audit and risk subcommittee of the bank ’ s board of directors. in addition to defining clear and comprehensive risk management roles and responsibilities using the three lines of defense model, the bank ’ s risk framework establishes governance, escalation, and reporting processes around risk exposures, risk decisions, and risk events. a bis central bankers ’ speeches strong governance regime

##ber 4. 5 4. 5 4. 0 4. 0 3. 5 3. 5 3. 0 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 source : the riksbank. the other question with regard to phasing out the extraordinary measures is when and how we should phase out the loans to the banks. the riksbank, unlike many other central banks, has not purchased any securities, which makes phasing out the support measures relatively uncomplicated. the dollar loans have already ceased, as it became cheaper for the banks to borrow dollars on the market than through the riksbank. the loans in kronor may be concluded in october 2010 as long as no decision is taken on new loans. the extraordinary measures will thus cease once the economy has recovered, and the situation in the financial sector has stabilised. the riksbank ’ s balance sheet will then decline. however, the financial crisis has shown that we should maintain a greater readiness to meet any new problems than we had prior to the crisis. how this might affect the balance sheet is a question the riksbank will be considering over the coming period. appendix : figures 17 and 18 the riksbank ’ s assets and liabilities 30. 09. 09 31. 12. 07 changes gold 28 295 25 827 2 468 foreign currency reserves 297 335 172 544 124 791 dollar lending to the banks 25 869 lending in sek to monetary policy counterparties 337 501 9 129 328 372 other assets 7 529 4 394 3 135 total assets 696 529 211 894 484 635 liabilities, sek million 30. 09. 09 31. 12. 07 changes banknotes and coins 105 998 114 324 - 8 326 fine - tuning, etc. 109 073 108 930 riksbank certificates 227 489 swap agreements with fed and ecb 20 253 loans through the sndo 91 186 repos foreign currency reserve 8 461 12 035 - 3 574 liability to im f ( sdr ) 24 912 2 517 22 395 other liabilities provisions revaluation accounts 11 705 33 170 4 277 20 063 7 428 13 107 capital 64 025 58 247 5 778 total liabilities 696 529 211 894 484 635 assets, sek million