Even small movements on the financial and foreign exchange markets can thus bring about a marked change in the SNB’s annual result, and this on the upside and downside alike. However, at neither of these points in time would a loss or profit actually be realised. A profit is only realised when we sell assets in the amount of the profit and convert the proceeds into Swiss francs. Book gains and losses therefore have a strong impact on the SNB’s annual result. Given the volatile developments on the international financial markets, substantial gains can be followed by substantial losses (Slide 2). With the greater size of our balance sheet, the range of fluctuations in our annual results has also increased. Every annual financial statement and the latest equity capital position must therefore always be regarded as simply a snapshot of the SNB’s financial situation at that moment in time. Page 3/7  Finely balanced approach to distributions Allow me to now explain in more detail how the SNB goes about distributing the profits it generates. The law at present makes two key stipulations in this respect: first, that building provisions – i.e. equity capital – is to take precedence over any distributions; and second, that distributions are to be smoothed over time. The SNB builds up equity capital from retained earnings. To this end, we make an allocation to the provisions for currency reserves every year, irrespective of whether we record a profit or loss.
But I would like to point out that these are preliminary views. I am happy to listen to arguments against them. The Riksbank’s assets can be roughly divided into two parts. We have a portfolio of Swedish securities (almost SEK 400 billion), that has been built up through quantitative easing for monetary policy purposes. And we have foreign exchange reserves (just over SEK 500 billion) that we hold for contingency purposes. 9 The Swedish portfolio consists solely of government bonds. This is partly to hold down financial risks, and partly because monetary policy, apart from determining the general interest-rate level, should disturb pricing on the financial markets as little as possible. The state is the Riksbank's principal. It would therefore seem inappropriate to me if the Riksbank chose government bonds to attempt to give the government incentive to work towards a more sustainable development. I therefore do not think that the Riksbank should treat green Swedish government bonds any differently from other Swedish government bonds. 10 The conditions for active climate consideration are slightly better in our work with the foreign exchange reserves. To ensure that the foreign exchange reserves fulfil their purpose, they need to consist of assets that can be rapidly converted to money even when the markets are not functioning properly. Our assessment is that the foreign exchange reserves best correspond to this need if they consist of 75 per cent US government bonds, 20 per cent German and 5 per cent British, Danish and Norwegian government bonds.