Management of financial assets
One of the statutory tasks of the Bank of Finland is the holding and management of foreign reserves. Market conditions in 2022 were challenging, and the return on the Bank of Finland’s financial assets was close to zero.
The Bank of Finland’s asset investments are guided by the investment policy decided annually by the Bank’s Board.
The investment policy, including the responsible investment principles, establishes a strategic market-based index that serves as a benchmark for the Bank's investment activities.
Return on Bank of Finland’s financial assets in 2022 close to zero
Market conditions in 2022 were challenging, as the returns globally from both equity and fixed-income investments were mostly negative. However, the return on the Bank of Finland’s financial assets was close to zero, which was attributable particularly to the strengthening US dollar and the rise in the price of gold.
At the end of 2022, the Bank of Finland’s financial assets amounted to around EUR 11 billion. These consisted of gold holdings, foreign reserves and investments in equity and real estate funds.
Switch in 2022 from fossil investments to those supporting the green transition
In 2022, the Bank of Finland updated its responsible investment principles. It also excluded fossil fuel producers from its potential investments.
The Bank of Finland was also actively involved in the drafting of the Eurosystem’s common stance on climate-related disclosures.
Increased risks associated with Bank of Finland’s monetary policy and financial assets in 2022
In 2022, the Eurosystem’s policy interest rates were increased, including the interest rate banks receive for depositing money with the central bank.
Based on the interest rate expectations prevailing at the end of 2022, this financing cost will push the Bank of Finland’s profit into negative territory in the immediate years ahead.
The Bank of Finland manages its risks through diversification, but there is a structural interest rate risk on its balance sheet.