“ monetary policy liabilities ” is used as a generic term for the items ‘ liabilities to credit institutions in sweden related to monetary policy operations denominated in swedish kronor ” and “ debt certificates issued ”. bis central bankers ’ speeches how has the riksbank ’ s balance sheet developed over the past decade? let us examine ( a simplified version of ) the riksbank ’ s balance sheet from the year - end 2004. ten years ago, the balance sheet total was sek 183 billion. the asset side was dominated by the gold and foreign currency reserves, which amounted to sek 166 billion. in addition, we had a monetary policy claim on the swedish banks of sek 17 billion. 2 at that time the riksbank lent money to the banking system and this was done through the monetary policy repo transaction ( therefore the name repo rate ). the assets are largely funded through the riksbank over the year issuing banknotes and coins to a value of sek 109 billion. the bank ’ s equity amounted to sek 65 billion. the small liability to the imf is a result of sweden ’ s membership of the international monetary fund. i do not intend so say so much about this item now. let us now compare this with how the balance sheet looks today. as you can all see, a lot has happened over the past ten years. for instance, we can observe that : the foreign currency reserve is sek 325 billion larger. this increase is mainly because we have borrowed the equivalent of sek 200 billion in foreign currency through the swedish national debt office to strengthen the foreign currency reserve. the riksbank ’ s balance sheet 2004 and 2014 sek billion source : the riksbanken the formal term in the balance sheet is “ lending to credit institutions in sweden related to monetary policy operations denominated in swedish kronor ”. bis central bankers ’ speeches we have once again acquired a securities portfolio in swedish krona. the riksbank previously had a portfolio of swedish securities but then this was phased out more than ten years ago. the stock of notes and coins has declined, partly due to card payments and electronic payments becoming more common. as a consequence of this, we now have monetary policy liabilities instead of a monetary policy claim. this means that we are now borrowing excess liquidity from the banking system instead of lending money to cover a liquidity deficit. i will return to this issue later on. one thing that is

the banknotes and coins item is declining and that there is nothing the riksbank can do about this – it is part of the technological developments taking place. with regard to foreign currency loans, i mentioned that the interest expenditure for them exceeds the income on the assets the loans fund. the riksbank ’ s equity exceeds sek 100 billion. this means that the riksbank has a good capacity to manage potential losses. and it is important for our credibility. eu legislation prescribes that it is the highest decision - making body in the central bank that shall decide on the size of the bank ’ s equity. it is of course important that the decision is made after a preparatory process that is transparent and predictable, with a healthy balance between promoting on the one side the need of the riksbank to have sufficient equity on each occasion and on the other side the interest of the swedish government to minimise the riksbank ’ s costs for tying up capital. to summarise, we can note that the riksbank currently only has one source of funding that it determines itself, namely monetary policy liabilities. in other words, the riksbank can always make payments by increasing liquidity in the banking system. but all other forms of funding are affected in one way or another by things beyond the bank ’ s control. at present, the repo rate is at zero and this means that the riksbank does not have any interest expenditure for the monetary policy liabilities. but this is temporary, and as the repo rate is raised, the bank ’ s interest expenditure will increase. this will also mean that profits decline. the coming years – profits declining, no dividends i have now spent some time on describing the riksbank ’ s balance sheet and discussing some of the challenges the bank is facing. but i have not yet said anything about the largest challenge for the bank in the short term. by this i mean the extremely low interest rates, both here in sweden and abroad. as i have already mentioned, the foreign currency reserve shall be managed so that the riksbank can provide emergency liquidity assistance in foreign currency at short notice. the assets therefore need to be easy to sell. they must also retain their value. therefore, the foreign currency reserve largely consists of very safe government bonds, mainly from the united states and germany. the yields on us and german government bonds are currently very low. as the riksbank ’ s income largely consists of the