Net international reserves are Norges Bank’s main assets, apart from the Government Pension Fund – Global, which does not affect the Bank’s results. Norges Bank’s liabilities consist of notes and coins in circulation and domestic deposits from the central government and banks. This balance sheet composition will normally generate a positive return over time. This is mainly because the Bank has substantial capital, as well as liabilities in the form of notes and coins in circulation. The Bank’s assets primarily consist of investments that generate a return. The assets are largely invested in foreign exchange and the liabilities are in NOK, which implies a considerable foreign exchange risk and a substantial capital requirement.

The main items in Norges Bank’s profit and loss account are interest and any net exchange gains or losses on the foreign exchange reserves. Exchange gains or losses are derived from exchange rate fluctuations, changes in equity prices and interest rate changes that affect bond prices. As Norges Bank’s results will depend on developments in these variables, the results may show wide annual fluctuations.

Interest income and dividends from foreign investments amounted to NOK 12.6 billion in 2008, which is NOK 2.9 billion less than in 2007. The fall in prices in international securities markets in 2008 resulted in a loss of NOK 54.3 billion, compared with a loss of NOK 3.7 billion in 2007.  Due to the depreciation of the Norwegian krone, foreign exchange reserves translated into NOK show exchange gains of NOK 63.5 billion in 2008, compared with exchange losses of NOK 26.9 billion in 2007. Exchange gains due to the depreciation of the krone have no effect on the international purchasing power of the foreign exchange reserves.

At the end of 2008, Norges Bank’s international reserves amounted to NOK 244.4 billion at market value when account is taken of repurchase agreements, borrowing and cash collateral.  This is NOK 0.4 billion less than at end-2007. In addition, Norges Bank’s foreign exchange deposits in domestic banks amounted to NOK 57.8 billion at end-2008. 

After the year’s allocations, the Adjustment Fund amounts to NOK 58.9 billion. As there are no funds in the Transfer Fund, no transfer will be made to the Treasury.