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 Riksbank has deliberately altered its balance sheet in recent years, but there are also changes in our environment that have affected the balance sheet, leading to its current composition. The way the balance sheet looks, combined with the developments in interest rates and yields on the Riksbank’s assets and liabilities also have decisive significance for the Riksbank’s capacity to make a profit. We need to understand the Riksbank’s balance sheet to be able to understand the connections. How has the balance sheet developed over time? And what do we think will happen to it in the future? How does our current balance sheet affect the Riksbank’s possibilities to make a profit? In conclusion, I intend to comment on the current situation with very low international interest rates, and what will happen if (or rather when) interest rates begin to rise. What will this entail for the Riksbank’s possibilities of making a profit? BIS central bankers’ speeches  1  The Riksbank’s measures are reflected in the balance sheet The Riksbank thus does not have the aim to make a profit, but the bank’s possibilities to make profits are nevertheless very important. They are connected to the Riksbank being able to conduct its monetary policy independent of the government and parliament. The Riksbank needs to be financially independent to do this in a credible manner.