Notes on the balance sheet

Assets

1.     Gold and gold receivables

The Bank of Finland’s holdings of gold total 1,406,634 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. In 2024, the Bank of Finland sold gold holdings in a total of 169,853 troy ounces.

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 of Finland’s foreign reserves, and receivables from the International Monetary Fund (IMF).

2.1 Receivables from the International Monetary Fund (IMF)

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

The Bank of Finland’s holdings of special drawing rights (SDRs) are equivalent to EUR 4,514.2 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 amount of the sub-item changes on the basis of currency 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.

In total, the Bank of Finland’s receivables from the IMF amount to EUR 5,436.1 million. 

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

This item consists of foreign currency-denominated security and fund investments as well as external loans and other external assets denominated in foreign currency.

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 denominated in foreign currency.

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

This item consists of cash collateral totalling EUR 4.7 million related to foreign exchange swaps and forwards.

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

This 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 34.2 billion, of which the Bank of Finland holds EUR 290 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.

5.1 Main refinancing operations

Main refinancing operations (MROs) are liquidity providing reverse transactions which are executed with a weekly frequency and a maturity of one week, on the basis of standard tenders. They are conducted as fixed rate tender procedures. These operations play a key role in achieving the aims of steering interest rates, 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. These operations were conducted at fixed rate with allotment of the total amount bid. In addition to the series of seven quarterly targeted longer-term refinancing operations (TLTRO III) introduced in 2019, the Governing Council added three further operations to this series in December 2020, which were conducted between June and December 2021. These operations had a three-year maturity and therefore the last operation matured in 2024. For all TLTROs-III, starting 12 months after the settlement of each operation, participants had the option on a quarterly basis of terminating or reducing the amount of TLTRO III concerned before maturity. Borrowing rates in these operations could be as low as 50 basis points below the average interest rate on the deposit facility over the period from 24 June 2020 to 23 June 2022, but in any case they might not become less negative than -1%, and as low as the average – for the relevant period – interest rate on the deposit facility during the rest of the life of the same operationOn 27 October 2022 the Governing Council decided that, from 23 November 2022 until the maturity date or early repayment date of each respective outstanding TLTRO III operation, the interest rate on TLTRO III operations will be indexed to the average applicable key ECB interest rates over this period..

The actual interest rates could only be known at the maturity or early repayment of each operation and before that a reliable estimate was used for calculating the TLTRO III interest accruals. This means that, for the annual accounts 2023, the interest rate for the accruals was indexed to the average applicable key ECB interest rate since the beginning of the last interest period of these operations, which begun on 23 November 2022. Any difference between the accrued and the actual interest is reflected in the result for 2024.

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 balances with euro area credit institutions.

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 purchases

As at 31 December 2024 this item consisted of securities acquired by the Bank of Finland within the scope of the Securities Markets Programme (SMP), the third covered bond purchase programme (CBPP3), the public sector purchase programme (PSPP), the corporate sector purchase programme (CSPP) and the pandemic emergency purchase programme (PEPP).

In 2024 the asset purchase programme (APP) portfolio continued to decline, as the Eurosystem, since July 2023, no longer reinvests the principal payments from maturing securitiesSee the press release of 15 June 2023 on the Governing Council’s decisions..

As concerns the PEPPFurther details on the PEPP can be found on the ECB’s website., following the Governing Council decision in December 2023See the press release of 14 December 2023 on the Governing Council’s decisions., during the first half of 2024 the Eurosystem continued to reinvest, in full, the principal payments from maturing securities. Over the second half of the year, the PEPP portfolio declined by EUR 7.5 billion per month on average, as the Eurosystem did not reinvest all of the principal payments from maturing securities. The reinvestments under the PEPP were discontinued at the end of 2024.

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 ‘Accounting policies’). The amortised cost of the securities held by the Bank of Finland, and their market valueMarket values are indicative and are derived on the basis of market quotes. When market quotes are not available, market prices are 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:

The Governing Council assesses on a regular basis the financial risks associated with the securities held under these programmes. In this context, 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 cases where impairment indicators are observed, further analysis is performed to confirm that the cash flows of the underlying securities have not been affected by an impairment event.

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, and from holdings of covered bonds (PEPP-COV) and of corporate sector securities (PEPP-CORP) 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.

Based on the results of this year’s impairment tests, no losses have been recorded by the Bank of Finland for the securities held in its monetary policy portfolios in 2024.

The following table shows, for each programme, total holdings of Eurosystem NCBs and the Bank of Finland’s share held on the balance sheet.

7.2 Other securities

This item consists of holdings of fund shares issued by euro area residents.

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. The most recent such adjustment took effect on 1 January 2024.

Consequently, on 1 January 2024, the share that the Bank of Finland held in the subscribed capital of the ECB – EUR 10.8 billion in total – decreased from 1.4939% to 1.4853% and asset item 8.1 ʻParticipating interest in ECB’ decreased from EUR 187.7 million to EUR 184.8 million.

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.

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. In line with Article 30.2 of the Statute of the ESCB, these contributions are fixed in proportion to the NCBs’ share in the subscribed capital of the ECB. The remuneration of these claims was calculated daily at the latest available interest rate used by the Eurosystem in its tenders for main refinancing operations, adjusted to reflect a zero return on the gold component.

As at 31 December 2024, the Bank of Finland’s claims equivalent to the transfer of foreign reserves totalled EUR 736.8 million. 

8.3 Claims related to TARGET

This item consists of the TARGET balance of the Bank of Finland vis-à-vis the ECB (see ‘Intra-ESCB balances/intra-Eurosystem balances’ in ‘Accounting policies’. As at 31 December 2024, the item amounted to EUR 20,896.8 million (2023: EUR 59,005.9 million). The decrease in the TARGET claim resulted mainly from a contraction in the amount of deposits with the Bank of Finland.

The remuneration of this claim was calculated daily at the latest available interest rate used by the Eurosystem in its tenders for main refinancing operations (see section ‘Post-balance-sheet events’). 

8.4 Net claims related to the allocation of euro banknotes within the Eurosystem or liability item ‘Net liabilities 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 in ‘Net claims related to the allocation of euro banknotes within the Eurosystem’ or ‘Net liabilities related to the allocation of euro banknotes within the Eurosystem’.

At the end of 2024, the balance sheet item totalled EUR 6,950.7 million (EUR 7,282.6 million in 2023). The change in comparison to 2023 was due to the increase of 3.2% in banknotes put into circulation by the Bank of Finland in 2023 as well as the rise of 1.0% in banknotes in circulation in the Eurosystem as a whole. The remuneration of these claims was calculated daily at the latest available interest rate used by the Eurosystem in its tenders for main refinancing operations.

8.5 Other claims within the Eurosystem (net) or liability item ‘Other liabilities within the Eurosystem (net)’

The balance of EUR 227.4 million as at 31 December 2024 represents the sum of three components: (1) the balances held with euro area 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 from the ECB in respect of the ECB’s interim profit distribution.

Regarding the first component, the Bank of Finland had no balances due in respect of correspondent accounts at year-end.

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 national central banks, had a credit balance of EUR 227.4 million at year-end (see ‘Net result of pooling monetary income’ in ‘Notes on the profit and loss account’).

With respect to 2024, the Governing Council, in view of the ECB’s overall financial result for the year, decided to retain the full amount of income derived from banknotes in circulation, as well as income earned on securities purchased under the SMP, APP and PEPP (see section 7. ‘Interim profit distribution by the ECB’ in ‘Accounting policies’). Therefore no related amounts were due at the end of 2024. 

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.

Liabilities

1. Banknotes in circulation

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

During 2024, the total value of euro banknotes in circulation increased by 1.0%. According to the allocation key, the Bank of Finland had euro banknotes in circulation worth EUR 26,541.2 million at the end of the year compared with EUR 26,274.6 million at the end of 2023. The value of the euro banknotes actually issued by the Bank of Finland in 2024 increased by 3.2% from EUR 18,992.0 million to EUR 19,590.5 million. As this was less than the allocated amount, the difference of EUR 6,950.7 million (compared to EUR 7,282.6 million in 2023) is shown under asset sub-item ‘Net claims related to the allocation of euro banknotes within the Eurosystem’.

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

2.1 Current accounts (covering the minimum reserve system)

Current accounts contain the credit balances of the transaction accounts of credit institutions that are required to hold minimum reserves, excluding funds of credit institutions that are not freely disposable and accounts of credit institutions exempt from minimum reserve requirements, which are disclosed separately under liability item 3 ‘Other liabilities to euro area credit institutions denominated in euro’.

Following a Governing Council decision on 27 July 2023, minimum reserve balances are remunerated at zero percent since 20 September 2023. Between 21 December 2022 and 19 September 2023, these balances were remunerated at the Eurosystem’s 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 2024, the Bank of Finland did not have other liabilities to euro area credit institutions denominated in euro. At the end of 2023, this item amounted to EUR 6.1 million and consisted of collateral related to foreign exchange swaps and forwards. 

4. Liabilities to other euro area residents denominated in euro

This item consists of euro-denominated liabilities to the public sector (EUR 5,450.0 million) and to financial institutions not subject to minimum reserve requirements (EUR 30.0 million). 

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

This item consists of balances of international organisations and of non-euro area banks and financial institutions with the Bank of Finland (EUR 4,950.0 million).

6. Liabilities to euro area residents denominated in foreign currency

As at 31 December 2024, 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 2024, 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 counterpart entry of special drawing rights (SDRs, cf. item on the assets side). Originally, holdings of special drawing rights on the assets side of the balance sheet and their counterpart on the liabilities side matched up. As a result of SDR transactions, the Bank of Finland’s claims related to special drawing rights as at year-end were greater than the counterpart entry on the liabilities side. On the liabilities side, the counterpart amounts to SDR 3,500.0 million. In the balance sheet, the item is presented in euro, valued at the rate prevailing on 31 December 2024 (EUR 4,390.4 million).

9. Intra-Eurosystem liabilities (net)

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

10. Other liabilities

This item consists of accruals, accounts payable and sundry liabilities. Accruals include e.g. transferable items recorded in connection with the financial accounts and accrued interest payable on repurchase agreements. Sub-item ‘Sundry’ includes e.g. liabilities related to value added and withholding tax payments.

11. Revaluation accounts

This item consists of 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 policies in 1999.

12. Provisions

12.1 Risk 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 2024, risk provisions totalled EUR 2,676.8 million. These provisions consist of a provision against real value loss and a foreign exchange rate and price difference provision. 

12.2 Other provisions

The item ‘Other provisions’ consists of the Bank of Finland’s pension provision, which has been established to cover the Bank’s pension liabilities. These liabilities amount to EUR 593.6 million and have been covered up to a total of 101.4%, i.e. EUR 601.9 million. The change in the size of the pension provision in 2024 is due to a reduction of EUR -0.4 million in the revaluation reserve and of a profit of EUR 15.7 million for the pension fund. At the end of 2024, real estate in the value of EUR 7.3 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 594.7 million) of the pension provision. Instead, these assets are managed as part of the Bank’s financial assets.

In 2023, as a result of an impairment test conducted on the PEPP-CORP portfolio, the Governing Council deemed it appropriate to establish a buffer totalling EUR 42.9 million against credit risks in monetary policy operations. In accordance with Article 32.4 of the ESCB Statute, this buffer was funded by all the national central banks of participating Member States in proportion to their subscribed capital key shares in the ECB prevailing in 2023. As a result, a provision for EUR 0.8 million equivalent to 1.82209% of the total provision was created. The provision against credit risks in monetary policy operations, which was included in other provisions, was dissolved in the financial statements for 2024. 

13. Capital and reserves

This item consists of the Bank of Finland’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.

14. Profit for the year

Profit for the financial year 2024 totalled EUR 0.00.

Off-balance-sheet commitments

As at 31 December 2024, EUR -18,7 million of the market value of FX contracts was related to hedging against currency risk.

In accordance with the Governing Council’s decisions, the Bank of Finland has made available for lending, securities held for monetary policy purposes. The Bank has also made securities in its own investment portfolio available for lending. Securities lending operations conducted against collateral other than cash are recorded in off-balance-sheet accounts at year-end.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). Such lending operations with a value of EUR 30.7 million (2023: EUR 79.2 million) were outstanding as at 31 December 2024.