The Riksbank's activities 2013: Expansionary monetary policy and focus on financial imbalances
In 2013, the Riksbank conducted an expansionary monetary policy while also taking into account risks associated with financial imbalances, such as a high level of indebtedness among Swedish households. The Riksbank took these risks into account in its monetary policy and in its work to safeguard financial stability. This is noted in the Riksbank's Annual Report for 2013, which has been submitted to the Riksdag (the Swedish parliament) today.
The Swedish economy was strongly affected by the weak development of the economy in the euro area last year. The problems in the debt-crisis countries were still generating uncertainty and held back demand despite the economic recovery in the United States and growth in Asia. The weaker economic climate, combined with factors such as dampened export prices, led to inflation measured in terms of the Consumer Price Index (CPI) averaging close to 0 per cent for the year. Average inflation measured with a fixed mortgage rate (CPIF) was 0.9 per cent.
"Monetary policy had to remain expansionary to support the recovery and to get inflation to rise to the target of 2 per cent. Monetary policy also had to consider that household indebtedness and prices on the housing market were developing in a way that could entail increasing risks for the economy during the coming period," says the Governor of the Riksbank, Stefan Ingves, in his comments on the Riksbank's Annual Report 2013.
Among other things, the Annual Report presents a review of the Riksbank's work on analysing risks that could develop in the financial system and threaten its stability. Swedish banks demonstrated financial strength during the year, but their market funding in foreign currencies and the high level of indebtedness among Swedish households still constitute risks that can threaten financial stability. The Riksbank also reports on its efforts to inform the public that the older versions of the 50-krona and 1,000-krona banknotes would become invalid at the end of the year and on the results of its other activities during 2013.
The Annual Report contains the Riksbank's balance sheet and profit and loss account, which show that the Riksbank's profit decreased by SEK 3.9 billion, to SEK -2.0 billion. This result can primarily be explained by write-downs relating to the Riksbank's securities holdings resulting from the rise in market rates over the year. The Riksbank has analysed the potential impact of market rates on its profits in the future. This analysis shows that the Riksbank's annual transfers to the Treasury may decrease in the years ahead. The balance sheet total increased over the year by SEK 85.9 billion to SEK 431.6 billion, primarily due to the implementation of the Riksbank's decision at the end of 2012 to increase the foreign currency reserve by the equivalent of approximately SEK 100 billion.
The Riksbank's Annual Report for 2013 can be read as a parliamentary document in Swedish via the link on this website. English and Swedish versions of the Annual Report, in the Riksbank's standard layout, will be published on 31 March 2014, when it will be possible to download the report or order copies through this website.