Assets

1. Gold and gold receivables

The Bank of Finland’s holdings of gold total 1,576,487 troy ounces (1 troy ounce = 31.103 g). In the annual accounts, gold has been valued at market price. At the beginning of 1999 the Bank of Finland – and the other national central banks (NCBs) participating in the Eurosystem – transferred about 20% of its gold holdings to the ECB.

Gold 31 Dec 2020 31 Dec 2019
Holdings (troy ounces, million) 1.6 1.6
Price: EUR per troy ounce 1,543.9 1,354.1
Market price (EUR m) 2,433.9 2,134.7
Change in market value (EUR m) 299.2 367.5

2. Claims on non-euro area residents denominated in foreign currency

The item consists of claims on non-euro area residents denominated in foreign currency and included in the Bank’s foreign reserves, and receivables from the International Monetary Fund (IMF).

2.1 Receivables from the International Monetary Fund (IMF)

Breakdown of receivables from the IMF 31 Dec 2020 31 Dec 2019
EUR m SDR m EUR m SDR m
Reserve tranche in the IMF 576.0 488.7 494.5 400.7
Special drawing rights 1,326.5 1,125.5 1,387.5 1,124.5
Other receivables from the IMF 70.7 60.0 79.0 64.3
Total 1,973.3 1,674.2 1,961.0 1,589.5
EUR/SDR exchange rate in financial years 2019 and 2020 2020 2019
End-March 0.8025 0.8092
End-June 0.8143 0.8186
End-September 0.8318 0.7996
End-December 0.8485 0.8104

Finland’s quota in the IMF amounts to SDR 2,410.6 million. The reserve tranche is the part of the Bank’s quota that has been paid to the IMF in foreign currency. Another part of the quota was formerly paid to the IMF in Finnish markka. The IMF has lent this part back to the Bank of Finland. The net effect of the Finnish markka quota on the Bank’s balance sheet is zero, since the above-mentioned receivables and the liability are included in the same balance sheet item.

The Bank of Finland’s special drawing rights allocation amounts to EUR 1,326.5 million. Special drawing rights are reserve assets created and allocated by the IMF to its member countries. They are used in currency transactions as normal currency units. The value of the sub-item changes on the basis of foreign exchange transactions between the member countries. It is also affected by interests earned and paid as well as remuneration on the Bank’s claims in the IMF.

The Bank of Finland’s receivables from the IMF total EUR 1,973.3 million.

2.2 Balances with banks and security investments, external loans and other external assets

This item includes foreign currency-denominated deposits and security investments as well as external loans and other external assets.

Breakdown of claims on non-euro area residents denominated in foreign currency 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Deposits 41.8 101.5 -59.7
Coupon papers 4,579.4 4,954.4 -375.0
Discount papers 2.9 -2.9
Fund investments 1,134.6 1,134.6
Other 732.0 911.8 -179.8
Total 6,487.9 5,970.6 517.3
Currency breakdown of securities of non-euro area residents denominated in foreign currency
31 Dec 2020 31 Dec 2019
Currency EUR m % EUR m %
Pound sterling 432.5 9.4 490.1 9.9
US dollar 3,896.0 85.1 4,279.9 86.3
Japanese yen 250.9 5.5 187.2 3.8
Total 4,579.4 100.0 4,957.3 100.0
Remaining maturity of securities of non-euro area residents denominated in foreign currency
31 Dec 2020 31 Dec 2019
Maturity EUR m % EUR m %
Up to 1 year 889.9 19.4 759.0 15.3
Over 1 year 3,689.5 80.6 4,198.3 84.7
Total 4,579.4 100.0 4,957.3 100.0

3. Claims on euro area residents denominated in foreign currency

This item consists of foreign currency-denominated deposits and securities as well as other claims on euro area residents.

Breakdown of claims on euro area residents denominated in foreign currency 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Deposits 32.2 32.2
Coupon papers 270.9 332.8 -62.0
Other -8.4 -8.1 -0.3
Total 294.7 324.7 -30.0
Currency breakdown of securities of euro area residents denominated in foreign currency
31 Dec 2020 31 Dec 2019
Currency EUR m % EUR m %
Pound sterling 182.4 67.3 185.8 55.8
US dollar 88.5 32.7 147.0 44.2
Total 270.9 100.0 332.8 100.0
Remaining maturity of securities of euro area residents denominated in foreign currency
31 Dec 2020 31 Dec 2019
Maturity EUR m % EUR m %
Up to 1 year 96.9 35.8 124.6 37.4
Over 1 year 174.0 64.2 208.2 62.6
Total 270.9 100.0 332.8 100.0

4. Claims on non-euro area residents denominated in euro

As at 31 December 2020, the Bank of Finland had no claims on non-euro area residents denominated in euro. In 2019, this item included securities issued outside the euro area.

Claims on non-euro area residents denominated in euro 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Deposits
Coupon papers 226.8 -226.8
Other
Total 226.8 -226.8
Remaining maturity of securities of non-euro area residents denominated in euro
31 Dec 2020 31 Dec 2019
Maturity EUR m % EUR m %
Up to 1 year 47.0 20.7
Over 1 year 179.8 79.3
Total 226.8 100.0

5. Lending to euro area credit institutions related to monetary policy operations denominated in euro

This item includes monetary policy instruments used by the Bank of Finland to implement monetary policy as part of the Eurosystem. The item consists of interest-bearing credit to Finnish credit institutions, and the amount recorded is determined by the credit institutions’ liquidity needs.

The total Eurosystem holding of monetary policy assets amounts to EUR 1,793,194 million, of which the Bank of Finland holds EUR 21,779.0 million. In accordance with Article 32.4 of the ESCB Statute, losses from monetary policy operations, if they were to materialise, are shared in full by the Eurosystem NCBs, in proportion to the prevailing ECB capital key shares. Losses can only materialise if both the counterparty fails and the recovery of funds received from the resolution of the collateral provided by the counterparty is not sufficient. For specific collateral which can be accepted by NCBs at their own discretion, risk sharing has been excluded by the Governing Council of the ECB.

Lending to euro area credit institutions related to monetary policy operations denominated in euro 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Main refinancing operations
Longer-term refinancing operations 21,779.0 4,648.3 17,130.7
Fine-tuning reverse operations
Structural reverse opeerations
Marginal lending facility
Credits related to margin calls
Total 21,779.0 4,648.3 17,130.7

5.1 Main refinancing operations

Main refinancing operations (MROs) are executed through liquidity providing reverse transactions with a frequency and a maturity of normally one week, on the basis of standard tenders. These operations play a key role in achieving the aims of steering interest rate, managing market liquidity and signalling the monetary policy stance.

5.2 Longer-term refinancing operations

These operations (LTROs) aim to provide counterparties with additional longer-term refinancing. In 2020 operations were conducted with maturities equal to the reserve maintenance period and with maturities between 3 and 48 months. These operations were conducted at fixed rate with allotment of the total amount bid.

In 2016 the Governing Council introduced a new series of four targeted longer-term refinancing operations (TLTRO II). These operations have a four-year maturity, with a possibility of repayment after two years. Additionally, in 2019 the Governing Council introduced a new series of sevenOn 10 December 2020 the Governing Council added three further operations to this series, which will be conducted between June and December 2021. quarterly targeted longer-term refinancing operations (TLTRO III). These operations have a three-year maturity, with a possibility of repayment after two years, and from September 2021 repayment is possible one year after the settlement of each operation. According to the initial decisions taken by the Governing Council, the final interest rate applicable to each TLTRO-III operation could be as low as the average interest rate on the deposit facility prevailing over the life of the operation. Furthermore, in response to the COVID-19 shock, in 2020On 30 April 2020 the Governing Council decided that the special interest period would be between 24 June 2020 and 23 June 2021. On 10 December 2020, the Governing Council decided to extend this period by twelve months, to 23 June 2022. the Governing Council decided that for the period between 24 June 2020 and 23 June 2022 – referred to as the special interest rate period – the interest rate applicable can be as low as 50 basis points below the average interest rate on the deposit facility prevailing over the same period, but in any case may not become less negative than -1%. Given that the actual interest rates will only be known at the maturity of each operation and that a reliable estimate is not possible until that time, the deposit facility rate minus 50 basis points, with a ceiling of -1% is used for calculating the TLTRO III interest over the special interest period, and, the deposit facility rate is used for calculating the TLTRO III interest over the rest of the life of an operation, as this was deemed a prudent approach.

Additionally, on 30 April 2020 the Governing Council decided to conduct a new series of seven additional longer-term refinancing operations which mature in the third quarter of 2021, called pandemic emergency longer-term refinancing operations (PELTROs). These operations provide liquidity support to the euro area financial system and contribute to preserving the smooth functioning of money markets by providing an effective backstop after the expiry of the bridge longer-term refinancing operations (LTROs) that have been conducted since March 2020. The PELTROs are conducted as fixed rate tender procedures with full allotment. The interest rate is 25 basis points below the average rate applied in the Eurosystem’s main refinancing operations over the life of the respective PELTRO.On 10 December 2020 the Governing Council also decided to offer four additional pandemic emergency longer-term refinancing operations in 2021.

5.3 Fine-tuning reverse operations

Fine-tuning reverse operations aim to regulate the market liquidity situation and steer interest rates, particularly to smooth the effects on interest rates caused by unexpected market fluctuations. Owing to their nature, they are executed on an ad-hoc basis.

5.4 Structural reverse operations

These are reverse open-market transactions through standard tenders to enable the Eurosystem to adjust its structural liquidity position vis-à-vis the financial sector.

5.5 Marginal lending facility

Marginal lending facilities may be used by counterparties to obtain overnight liquidity from NCBs at a pre-specified interest rate against eligible assets.

5.6 Credits related to margin calls

This item refers to cash paid to counterparties in those instances where the market value of the collateral exceeds an established trigger point implying an excess of collateral with respect to outstanding monetary policy operations.

6. Other claims on euro area credit institutions denominated in euro

This item consists of euro-denominated deposits and accounts with euro area credit institutions.

Other claims on euro area credit institutions
denominated in euro
31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Current accounts 0.0 0.6 -0.5
Reverse repurchase agreements
Emergency Liquidity Assistance (ELA)
Other
Total 0.0 0.6 -0.5

On 17 May 2017, the Governing Council decided to publish the text of the Emergency Liquidity Assistance (ELA) agreement with the aim of further increasing transparency regarding ELA. This publication replaces the ELA procedures document that has been available on the ECB website since October 2013. For the text of the press release, click on:http://www.ecb.europa.eu/press/pr/date/2017/html/ecb.pr170619.en.html.

7. Securities of euro area residents denominated in euro

7.1 Securities held for monetary policy purposes

As at 31 December 2020 this item consisted of securities acquired by the Bank of Finland within the scope of the three covered bond purchase programmes (CBPPs)Decision ECB/2009/16 of 2 July 2009 on the implementation of the covered bond purchase programme, OJ L 175, 4.7.2009, p. 18, Decision ECB/2011/17 of 3 November 2011 on the implementation of the second covered bond purchase programme, OJ L 297, 16.11.2011, p. 70 and Decision ECB/2014/40 of 15 October 2014 on the implementation of the third covered bond purchase programme, OJ L 335, 22.10.2014, p. 22, as amended., the Securities Markets Programme (SMP)Decision ECB/2010/5 of 14 May 2010 establishing a securities markets programme, OJ L 124, 20.5.2010, p. 8., the public sector purchase programme (PSPP)Decision ECB/2015/10 of 4 March 2015 establishing a public sector purchase programme, OJ L 121, 14.5.2015, p. 20, as amended., the corporate sector purchase programme (CSPP)Decision ECB/2016/16 of 1 June 2016 establishing a corporate sector purchase programme, OJ L 157, 15.6.2016, p. 28, as amended. and the pandemic emergency purchase programme (PEPP).

Start date End date Decision Universe of eligible securities1
Completed / Terminated programmes
First covered bond purchase programme (CBPP1) July 2009 June 2010 ECB/2009/16 Covered bonds of euro area residents
Second covered bond purchase programme (CBPP2) November 2011 October 2012 ECB/2011/17 Covered bonds of euro area residents
Securities Markets Programme (SMP) May 2010 September 2012 ECB/2010/5 Private and public debt securities issued in the euro area
1) Further eligibility criteria for the specific programmes can be found in the Governing Council's decisions.
Start date End date Decision Universe of eligible securities1
Asset purchase programme (APP)
Third covered bond purchase programme (CBPP3) October 2014 active ECB/2020/8
(recast)
Covered bonds of euro area residents
Asset-backed securities purchase programme (ABSPP) November 2014 active ECB/2014/45,
as amended
Senior and guaranteed mezzanine tranches of asset-backed securities of euro area residents
Public sector purchase programme (CSPP) March 2015 active ECB/2020/9
(recast)
Bond issued by euro-area central, regional of local government or recognised agencies as well as issued by international organisations and multilateral development banks located in the euro area
Corporate sector purchase programme (CSPP) June 2016 active ECB/2016/16,
as amended
Bonds issued by non-bank corporations established in the euro area
Pandemic emergency purchase programme (PEPP)
Pandemic emergency purchase programme (PEPP) March 2020 active ECB/2020/17 All asset categories eligible under the APP2
1) Further eligibility criteria for the specific programmes can be found in the Governing Council's decisions.
2) A waiver of the eligibility requirements was granted for securities issued by the Greek Government.

In 2020 the Eurosystem continued its net purchases under the asset purchase programme (APP)The APP programme consists of the third covered bond purchase programme (CBPP3), the asset-backed securities purchase programme (ABSPP), the PSPP and the CSPP. Further details on the APP can be found on the ECB’s website (https://www.ecb.europa.eu/mopo/implement/omt/html/index.en.html). at a monthly pace of EUR 20 billion on average. In March 2020 a temporary envelope of additional net asset purchases of EUR 120 billion was added until the end of the year. The Governing Council expects net purchases to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates. The Governing Council also intends to continue the reinvestments for an extended period of time past the date when the Governing Council starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

Additionally, in March 2020 the Eurosystem launched a temporary pandemic emergency purchase programme (PEPP)Further details on the PEPP can be found on the ECB’s website (https://www.ecb.europa.eu/mopo/implement/pepp/html/index.en.html)., with an envelope of EUR 750 billion, to ease the overall monetary policy stance and to counter the severe risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the coronavirus pandemic. Purchases include all the asset categories eligible under the APP and were initially foreseen until the end of 2020. In June 2020 the Governing Council increased the envelope for the PEPP by EUR 600 billion, and in December 2020 by an additional EUR 500 billion, bringing it to a total of EUR 1,850 billion. The horizon for net purchases was also extended to at least the end of March 2022 and in any case, until the Governing Council judges that the coronavirus crisis phase is over. Furthermore, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the PEPP until at least the end of 2023. The future roll-off of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance.

The securities purchased under all of these programmes are valued on an amortised cost basis subject to impairment (see ‘Valuation and amortisation of securities’ in the notes on accounting conventions). The amortised cost of the securities held by the Bank of Finland, and their market valueMarket values are indicative and were derived on the basis of market quotes. When market quotes were not available, market prices were estimated using internal Eurosystem models. (which is not recorded on the balance sheet or in the profit and loss account and is provided for comparison purposes only), are as follows:

Securities held for monetary policy purposes (EUR m)
31 Dec 2020 31 Dec 2019 Change
Balance sheet value Market value Balance sheet value Market value Balance sheet value Market value
CBPP2 10.0 10.4 15.0 16.2 -5.0 -5.8
SMP 413.2 438.4 617.4 668.5 -204.2 -230.1
CBPP3 9,668.7 9,915.2 7,409.2 7,563.2 2,259.6 2,352.0
PSPP - public sector securities 29,822.5 31,793.8 28,629.7 30,038.8 1,192.8 1,755.0
PSPP - supranational securities 2,664.1 2,917.4 3,017.0 3,176.6 -352.9 -259.2
CSPP 10,151.4 10,587.4 6,257.9 6,491.5 3,893.5 4,095.9
PEPP - covered bonds 95.3 96.9 95.3 96.9
PEPP - public sector securities 10,784.7 10,926.4 10,784.7 10,926.4
PEPP - corporate sector securities 1,866.8 1,991.0 1,866.8 1,991.0
Total 65,476.7 68,676.8 45,946.2 47,954.8 19,530.5 20,722.0

The Governing Council assesses on a regular basis the financial risks associated with the securities held under these programmes. Impairment tests are conducted on an annual basis, using data as at the year-end and are approved by the Governing Council. In these tests, impairment indicators are assessed separately for each programme.

In accordance with Article 32.4 of the ESCB Statute, losses from holdings of securities purchased under the SMP, CBPP3 and CSPP programmes, from holdings of securities of supranational organisations purchased under the PSPP as well as from holdings of covered bonds and corporate sector securities purchased under the PEPP, if they were to materialise, are shared in full by the Eurosystem NCBs, in proportion to their prevailing ECB capital key shares.

As a result of impairment tests conducted as at 31 December 2020 on securities purchased under the aforementioned programmes, the Governing Council decided that all future cash flows on these securities are expected to be received. The following table shows, for each programme, total holdings of Eurosystem NCBs and the Bank of Finland’s share held on the balance sheet.

Securities held for monetary policy purposes (EUR m) Held by Eurosystem NCBs On the Bank of Finland's balance sheet
31 Dec 2020 31 Dec 2019 31 Dec 2020 31 Dec 2019
SMP 26,334.6 44,215.8 413.2 617.4
CBPP3 263,535.9 241,933.8 9,668.7 7,409.2
PSPP - supranational securities 249,316.6 225,169.2 2,664.1 3,017.0
CSPP 250,403.2 184,505.4 10,151.4 6,257.9
PEPP - covered bonds 2,814.7 95.3
PEPP - supranational securities 47,796.1
PEPP - corporate sector securities 43,153.6 1,866.8
Total 883,354.6 695,824.2 24,859.6 17,301.5

7.2 Other securities

This item includes fund shares from the euro area. It also includes domestic commercial papers purchased by the Bank of Finland to mitigate the negative economic impacts of the COVID-19 pandemic. In 2019, the item also included coupon and discount papers issued in the euro area.

Breakdown of other securities of euro area residents denominated in euro (EUR m) 31 Dec 2020 31 Dec 2019 Change
Coupon papers 528.7 -528.7
Discount papers 60.9 110.0 -49.1
Fund investments 119.5 1,204.0 -1,084.5
Total 180.4 1,842.7 -1,662.3
Remaining maturity of other securities of euro area residents denominated in euro 31 Dec 2020 31 Dec 2019
Maturity EUR m % EUR m %
Up to 1 year 60.9 100.0 233.2 36.5
Over 1 year 405.4 63.5
Total 60.9 100.0 638.7 100.0

In 2020, the Bank of Finland sold its euro-denominated investment assets, leading to a significant reduction in this balance sheet item during the financial year.

8. Intra-Eurosystem claims

8.1 Participating interest in ECB

Pursuant to Article 28 of the ESCB Statute, the ESCB national central banks are the sole subscribers to the capital of the ECB. Subscriptions depend on shares which are fixed in accordance with Article 29 of the ESCB Statute and are subject to adjustment every five years or whenever there is a change in composition of the ESCB national central banks.

For the Bank of Finland this balance sheet item includes (i) the paid-up share in the ECB’s subscribed capital, (ii) the net amount paid by the Bank of Finland due to the increase in its share in the ECB’s equity value resulting from all previous ECB capital key adjustments, and (iii) contributions in accordance with Article 48.2 of the Statute of the ESCB.

Changes to the ECB capital key

As a result of the departure of the United Kingdom from the European Union on 31 January 2020 and consequent withdrawal of the Bank of England from the ESCB, the weightings assigned to the remaining NCBs in the key for subscription to the ECB’s capital were adjusted as per the table below with effect from 1 February 2020. As a result, the Bank of Finland’s share in the key for subscription to the ECB’s capital was increased from 1.2708% to 1.4939% and asset item 8.1 ‘Participating interest in ECB’ increased by EUR 159.1 million to EUR 165.3 million.

Key for subscription of the ECB's capital Until 31 January 2020, % From 1 February 2020, %
Nationale Bank van België/Banque Nationale de Belgique 2.5280 2.9630
Deutsche Bundesbank 18.3670 21.4394
Eesti Pank 0.1968 0.2291
Central Bank of Ireland 1.1754 1.3772
Bank of Greece 1.7292 2.0117
Banco de España 8.3391 9.6981
Banque de France 14.2061 16.6108
Banca d'Italia 11.8023 13.8165
Central Bank of Cyprus 0.1503 0.1750
Latvijas Banka 0.2731 0.3169
Lietuvos bankas 0.4059 0.4707
Banque centrale du Luxembourg 0.2270 0.2679
Central Bank of Malta 0.0732 0.0853
De Nederlandsche Bank 4.0677 4.7662
Oesterreichische Nationalbank 2.0325 2.3804
Banco de Portugal 1.6367 1.9035
Banka Slovenije 0.3361 0.3916
Národná banka Slovenska 0.8004 0.9314
Suomen Pankki Finlands Bank 1.2708 1.4939
Subtotal for euro area NCBs 69.6176 81.3286
Bulgarian National Bank 0.8511 0.9832
Česká národní banka 1.6172 1.8794
Danmarks Nationalbank 1.4986 1.7591
Hrvatska narodna banka 0.5673 0.6595
Magyar Nemzeti Bank 1.3348 1.5488
Narodowy Bank Polski 5.2068 6.0335
Banca Naţională a României 2.4470 2.8289
Sveriges Riksbank 2.5222 2.9790
Bank of England 14.3374
Subtotal for non-euro area NCBs 30.3824 18.6714
Total 100.0000 100.0000

Capital of the ECB

The subscribed capital of the ECB is EUR 10,825 million. The ECB kept its subscribed capital unchanged after Bank of England’s withdrawal from the ESCB. The share of the Bank of England in the ECB’s subscribed capital, which stood at 14.3%, was reallocated among both the euro area NCBs and the remaining non-euro area NCBs.

The ECB’s paid-up capital also remained unchanged at EUR 7,659 million in 2020, as the remaining NCBs were required to cover the withdrawn Bank of England’s paid-up capital of EUR 58 million. As a result, the Bank of Finland paid EUR 1.7 million to the ECB on 3 February 2020. Euro area NCBs will then be required to pay up in full their increased subscriptions to the ECB capital in two annual instalments.This will lead to an increase in the ECB’s paid-up capital from EUR 7,659 million in 2020 to EUR 8,270 in 2021 and EUR 8,880 million in 2022. As a result, the Bank of Finland will be required to pay up EUR 11.2 million in both 2020 and 2021.

8.2 Claims equivalent to the transfer of foreign reserves

These represent the Bank of Finland’s claims arising from the transfer of foreign reserve assets to the ECB, when the Bank joined the Eurosystem. Pursuant to Article 30.2 of the Statute of the ESCB, these contributions are fixed in proportion to NCBs’ share in the subscribed capital of the ECB. The remuneration of these claims is calculated daily at the latest available marginal interest rate used by the Eurosystem in its tenders for main refinancing operations, adjusted to reflect a zero return on the gold component.

Following (a) the increase in the weighting of the euro area NCBs (which have transferred foreign reserve assets to the ECB) in the ECB’s subscribed capital resulting from Bank of England’s withdrawal from the ESCB and (b) a decision of the Governing Council to reduce the proportion of the euro area NCBs’ contributions, so that the total amount of foreign reserve assets already transferred by the euro area NCBs will remain at the current level, the Bank of Finland’s claim equivalent to this transfer was marginally adjusted. As a result, the Bank of Finland’s claim increased slightly, from EUR 736.4 million to EUR 741.1 million, and the difference was paid to the ECB on 3 February 2020.

8.3 Net claims related to the allocation of euro banknotes within the Eurosystem

This item consists of the claim arising from the adjustment of the banknotes of the Bank of Finland to correspond to the ECB capital key as well as the liability related to the share of 8% of the banknotes in circulation allocated to the ECB. For both the claim and the liability, the counter entry is recorded under the balance sheet liability item ʻBanknotes in circulation’.According to the accounting regime chosen by the Eurosystem on the issue of euro banknotes, a share of 8% of the total value of the euro banknotes in circulation is allocated to the ECB on a monthly basis. The remaining 92% of the value of the euro banknotes in circulation are allocated to the NCBs also on a monthly basis, whereby each NCB shows in its balance sheet a share of the euro banknotes issued corresponding to its paid-up share in the ECB’s capital. The difference between the value of the euro banknotes allocated to the NCB according to the aforementioned accounting regime, and the value of euro banknotes put into circulation, is recorded as ‛Net claims/liabilities related to the allocation of euro banknotes within the Eurosystem’.

At the end of 2020, the balance sheet item totalled EUR 6,871.6 million (EUR 4,908.0 million in 2019). The increase in comparison to 2019 was due to the increase of 3.4% in banknotes put into circulation by the Bank of Finland in 2020 as well as the rise of 11.7% in banknotes in circulation in the Eurosystem as a whole. The remuneration of these claims is calculated daily at the latest available marginal interest rate used by the Eurosystem in its tenders for main refinancing operations.

8.4 Other claims within the Eurosystem (net) or liability item Other liabilities within the Eurosystem (net)

Other claims/liabilities within the Eurosystem (net) 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Due to/from ECB in respect of TARGET2 (including balances held with Eurosystem banks through correspondent accounts) 49,467.7 57,067.1 -7,599.4
Due to/from ECB in respect of monetary income -398.3 -292.9 -105.4
Due from ECB in respect of the ECB's interim profit distribution 23.1 26.1 -3.0
Other claims/liabilities within the Eurosystem (net) 49,092.6 56,800.3 -7,707.7

The balance of EUR 49,092.6 million as at 31 December 2020 represents the sum of three components: (1) the position of the Bank of Finland vis-à-vis the ECB in respect of the transfers issued and received through TARGET2 by the ESCB national central banks, including the ECB, plus the balances held with Eurosystem central banks through correspondent accounts; (2) the position vis-à-vis the ECB in respect of the pooling and allocation of monetary income within the Eurosystem pending settlement; and (3) the Bank of Finland’s position vis-à-vis the ECB in respect of any amounts receivable or refundable, including the amount due to the Bank of Finland in respect of the ECB’s interim profit distribution.

Regarding the first component, the year-end net transfers via TARGET2 had a credit balance of EUR 49,467.7 million. The remuneration of this position is calculated daily at the latest available marginal interest rate used by the Eurosystem in its tenders for main refinancing operations.

The second component, i.e. the position vis-à-vis the ECB in respect of the annual pooling and allocation of monetary income within the Eurosystem NCBs, had a debit balance of EUR –398.3 million at year-end (see ‘Net result of pooling of monetary income’ in the notes on the profit and loss account).

Concerning 2020, following a decision by the Governing Council, the amount due to euro area NCBs with respect to the ECB’s interim profit distribution was EUR 1,260 million (see ‘Interim profit distribution by the ECB’ in the notes on accounting conventions). The related amount due to the Bank of Finland as at 31 December 2020 was EUR 23.1 million (see ‘Income from other equity shares and participating interests’ in the profit and loss account).

9. Other assets

This item consists of the Bank of Finland’s holdings of euro coins, fixed assets and investment assets (shares and other equity). The item also includes valuation results of off-balance sheet items, accruals and other receivables as well as the pension fund’s assets which consist entirely of real estates.

Tangible fixed assets
Book value 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Land 7.2 8.5 -1.3
Buildings 75.2 83.9 -8.7
Machinery and equipment 10.9 11.1 -0.3
Art and numismatic collection 0.6 0.6
Total 93.8 104.0 -10.2
Intangible fixed assets
Book value 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
IT systems 6.8 7.0 -0.2
Total 6.8 7.0 -0.2
Other holdings and sundry assets (EUR m) 31 Dec 2020 31 Dec 2019 Change
Coins of euro area 44.5 33.4 11.1
Shares and other equity 22.6 22.7 -0.0
Pension fund's real estate 12.1 12.8 -0.8
Accruals 425.6 379.6 46.0
Items relating to valuation of off-balance sheet items 18.0 28.9 -10.9
Sundry assets 1.1 2.3 -1.1
Total 524.0 479.7 44.3

Liabilities

1. Banknotes in circulation

This item consists of the Bank of Finland’s share, in accordance with the ECB’s capital key and adjusted for the share allocated to the ECB, of the total amount of euro banknotes in circulation.

During 2020, the total value of banknotes in circulation within the Eurosystem increased by 11.7%. According to the allocation key, the Bank of Finland had euro banknotes in circulation worth EUR 24,243.3 million at the end of the year, compared with EUR 21,711.6 at the end of 2019. The value of euro banknotes actually issued by the Bank of Finland in 2020 increased by 3.4% from EUR 16,803.6 million to EUR 17,371.6 million. As this was less than the allocated amount, the difference of EUR 6,871.6 million (compared to EUR 4,908.0 million in 2019) is shown under asset sub-item ‘Net claims related to the allocation of euro banknotes within the Eurosystem’.

Banknotes in circulation (EUR m) 31 Dec 2020 31 Dec 2019
EUR 5 74.9 77.9
EUR 10 -101.9 -94.1
EUR 20 3,281.1 3,263.6
EUR 50 12,285.6 11,661.3
EUR 100 -1,163.0 -1,117.2
EUR 200 738.3 654.5
EUR 500 2,256.6 2,357.5
Total 17,371.6 16,803.6
ECB issue figure -2,108.0 -1,887.8
CSM figure 8,979.6 6,795.9
Banknotes in circulation in accordance with the ECB capital key 24,243.3 21,711.6

2. Liabilities to euro area credit institutions related to monetary policy operations denominated in euro

Liabilities to euro area credit institutions related to monetary policy operations denominated in euro 31 Dec 2020
EUR m
31 Dec 2019
EUR m
Change
EUR m
Current accounts (covering the minimum reserve system) 89,190.3 65,126.6 24,063.7
Deposit facility 21,673.8 25,276.1 -3,602.3
Fixed-term deposits
Fine-tuning reverse operations
Deposits related to margin calls
Total 110,864.1 90,402.7 20,461.4

2.1 Current accounts (covering the minimum reserve system)

Current accounts contain the credit balances on the transaction accounts of credit institutions that are required to hold minimum reserves. Banks’ minimum reserve balances have been remunerated since 1 January 1999 at the latest available marginal interest rate used by the Eurosystem in its tenders for main refinancing operations. Since June 2014, the reserve holdings exceeding the required minimum reserves are remunerated at zero per cent or the deposit facility rate, whichever is lower.

Starting on 30 October 2019, the Governing Council introduced a two-tier system for reserve remuneration, which exempts part of credit institutions’ excess liquidity holdings (i.e. reserve holdings in excess of minimum reserve requirements) from negative remuneration at the rate applicable on the deposit facility. This part is remunerated at the annual rate of 0%. The volume of reserve holdings in excess of minimum reserve requirements that was exempt at year-end from the deposit facility rate – the exempt tier – was determined as a multiple of 6 on an institution’s minimum reserve requirements.The multiplier may be adjusted by the Governing Council over time in line with changing levels of excess liquidity holdings. The non-exempt tier of excess liquidity holdings continues to be remunerated at the lower of either zero percent or the deposit facility rate.

2.2 Deposit facility

The deposit facility refers to overnight deposits placed by banks that access the Eurosystem's liquidity absorbing standing facility at the pre-specified rate.

2.3 Fixed-term deposits

Fixed-term deposits are fine-tuning liquidity absorbing operations that take the form of deposits.

2.4 Fine-tuning reverse operations

Fine-tuning reverse operations are used to offset high liquidity imbalances.

2.5 Deposits related to margin calls

This item refers to deposits made by counterparties in those instances where the market value of the collateral pledged falls short of an established trigger point.

3. Other liabilities to euro area credit institutions denominated in euro

As at 31 December 2020, the Bank of Finland had no other liabilities to euro area credit institutions denominated in euro.

4. Liabilities to other euro area residents denominated in euro

This item consists of euro-denominated liabilities to the public sector (EUR 5,600.0 million) and credit institutions other than those subject to the reserve requirement (EUR 8.0 million).

5. Liabilities to non-euro area residents denominated in euro

This item consists of balances of international organisations and non-euro area banks with the Bank of Finland (EUR 2,523.4 million) and repurchase agreements (EUR 219.9 million).

6. Liabilities to euro area residents denominated in foreign currency

As at 31 December 2020, the Bank of Finland had no liabilities to euro area residents denominated in foreign currency.

7. Liabilities to non-euro area residents denominated in foreign currency

As at 31 December 2020, the Bank of Finland had no liabilities to non-euro area residents denominated in foreign currency.

8. Counterpart of special drawing rights allocated by the IMF

This item is the counteritem of special drawing rights (cf. item on the asset side). Originally the amount of special drawing rights and their counteritem were equal. As a result of transactions, the Bank of Finland’s claims related to special drawing rights were smaller at the end of 2020 than their counteritem on the liabilities side of the balance sheet. On the liabilities side, the counteritem is a fixed amount totalling SDR 1,189.5 million. In the balance sheet, the item is presented in euro, valued at the rate prevailing on 31 December 2020 (EUR 1,402.0 million).

9. Intra-Eurosystem liabilities (net)

Intra-Eurosystem liabilities and claims have been elaborated on in more detail in the notes on the balance sheet under assets item ‘Intra-Eurosystem claims’.

10. Other liabilities

This item consists of accruals, accounts payable and other liabilities. Accruals include e.g. transferable items recorded in connection with the financial accounts and interest payable on repurchase agreements and long-term refinancing operations. Sub-item ‘Sundry’ includes e.g. liabilities related to value-added and withholding tax payments as well as salaries and pensions to be paid.

Other liabilities (EUR m) 31 Dec 2020 31 Dec 2019 Change
Accruals 132.7 47.6 85.1
Accounts payable 0.0 1.3 -1.3
Sundry 0.3 -1.8 2.1
Total 133.0 47.1 85.9

11. Revaluation accounts

The item includes unrealised valuation gains arising from the market valuation of foreign currency-denominated items and securities. The item also includes revaluations of land and buildings and other valuation differences arising from changes in accounting practice in 1999.

Revaluation accounts (EUR m) 31 Dec 2020 31 Dec 2019 Change
Gold 2,044.9 1,745.7 299.2
Foreign currencies:
USD 335.9 865.7 -529.7
GBP 17.9 59.9 -42.0
JPY 95.5 123.6 -28.2
SDR 12.4 -12.4
Other currencies 0.2 0.2 0.0
Securities 130.9 81.1 49.8
Fund investments 109.6 229.2 -119.6
Other revaluations 141.2 150.1 -8.8
Total 2,876.1 3,267.9 -391.7

12. Provisions

Under section 20 of the Act on the Bank of Finland, provisions can be made in the annual accounts, if they are necessary for safeguarding the real value of the Bank’s funds or for smoothing out variations in profit and loss arising from changes in exchange rates or market values of securities. At the end of 2020, these provisions totalled EUR 5,236.5 million. Provisions consist of a general provision, provision against real value loss, pension provision and foreign exchange rate and price difference provision.

With respect to the provisions initially established in 2018 and adjusted in 2019 by all the NCBs of participating Member States with regard to credit risks in monetary policy operations, an amount of EUR 64 million was used to cover the loss realised after the sale in 2020 of the impaired securities held by one of the Eurosystem NCBs under the CSPP. Out of this amount, EUR 1.1 million were covered by the provision established in 2019 by the Bank of Finland.

The residual amount of the provisions established by the NCBs of participating Member States after the coverage of the realised loss resulted in a cumulative unused balance of EUR 26 million which is reflected in the profit and loss accounts of the NCBs of participating Member States in proportion to their subscribed capital key shares in the ECB prevailing in 2018 (the year when the initial impairment occurred). For the Bank of Finland, this amount was EUR 0.5 million.

The pension provision is made to cover Bank of Finland’s pension liabilities. These liabilities total EUR 556.0 million: 104.7% of this amount is covered by the pension provision, i.e. EUR 582.4 million. The change in the pension provision consists of a reduction of EUR –0.4 million in the revaluation account and a loss of EUR –6.4 million for the pension fund which was covered by reducing the pension provision. At the end of 2020, real estate in the value of EUR 12.1 million was earmarked for covering the pension provision (see ‘Other assets’ in the notes on the balance sheet). No specified assets have been earmarked for covering the remaining portion (EUR 570.3 million) of the pension provision. Instead, these assets are managed as part of the Bank’s financial assets.

Provisions (EUR m) Total
provisions
31 Dec 2018
Change in
provisions
2019
Total
provisions
31 Dec 2019
Change in
provisions
2020
Total
provisions
31 Dec 2020
Foreign exchange rate and price difference provision 809 24 833 331 1,164
General provision 1,795 50 1,845 100 1,945
Provision against real value loss 1,433 55 1,488 57 1,545
Pension provision 596 -7 589 -7 582
Provision against losses in monetary policy operations 3 -1 2 -2
Total 4,636 120 4,757 480 5,237

13. Capital and reserves

This item consists of the Bank’s primary capital and reserve fund. Under section 21 of the Act on the Bank of Finland, the loss shall be covered from the reserve fund, if the annual accounts of the Bank show a financial loss. If the reserve fund is insufficient to cover part of the loss, the uncovered part may be left temporarily uncovered. Any profits in subsequent years shall be used first to cover such uncovered losses.

Capital and reserves (EUR m) 31 Dec 2020 31 Dec 2019 Change
Primary capital 840.9 840.9
Reserve fund 2,031.8 1,900.0 131.8
Total 2,872.7 2,741.0 131.8

14. Profit for the financial year

The profit for the financial year 2020 totalled EUR 142.0 million.

Profit for the financial year (EUR m) 31 Dec 2020 31 Dec 2019 Change
To be transferred for the needs of the State 100.0 188.0 -88.0
Bank of Finland's share of profit (to be transferred to the reserve fund) 42.0 131.8 -89.7
Total 142.0 319.8 -177.7

Off-balance sheet commitments

Off-balance sheet commitments (EUR m) 31 Dec 2020 31 Dec 2019
Futures contracts
Nominal value of purchase agreements 69.4
Nominal value of sales agreements
Market value of FX swap agreements -0.0 3.8
Investment commitments related to real estate funds 50.0 50.0
Securities lending 744.6 37.0

In accordance with the Governing Council’s decisions, the Bank of Finland has made available for lending its holdings of securities purchased under the CBPPs, the CSPP and the PSPP. The Bank of Finland has also made available for lending securities belonging to its own investment assets. Securities lending operations conducted against collateral other than cash collateral are recorded in off-balance-sheet accounts at the end of the year.Cash collateral received in securities lending operations is recorded in on-balance-sheet accounts (see liability item 3. ‘Other liabilities to euro area credit institutions denominated in euro’ and liability item 5. ‘Liabilities to non-euro area residents denominated in euro’ in the notes on the balance sheet). There were no such loans as at 31 December 2020. Such lending operations with a value of EUR 745 million (2019: EUR 37 million) were outstanding as at 31 December 2020.