Norges Bank

Liquidity forecast

Norges Bank prepares and publishes a forecast of developments in structural liquidity. An updated version is available Mondays and Thursdays on Norges Bank’s website.

See the forecasts

Banks hold deposits in the form of central bank reserves in Norges Bank, which are used for settlement between banks or with the government. The term "structural liquidity" denotes the amount of reserves the banks hold in their account, excluding Norges Bank’s market operations (F-loans and F-deposits). The structural liquidity forecast provides an overview of what the level of aggregate central bank reserves will be throughout the year. Norges Bank evaluates the need to supply or reduce liquidity, as well as the maturity and allotment, based on the forecast. 
More information on the liquidity management system

Norges Bank is the government’s bank, as well as the bankers' bank, and the government holds an account in the central bank. The government’s cashflow in the form of revenue and expenditure results in large daily movements of deposits between banks’ accounts and the government’s account. This leads to large fluctuations in bank reserves in Norges Bank throughout the year. The government’s in- and outflows, changes in the market’s holdings of government securities, and Norges Bank's foreign exchange transactions on behalf of the government are the main drivers of changes in the forecast.

As an example, when private agents pay taxes to the government, reserves are transferred from their banks’ accounts in the central bank to the government’s account in Norges Bank. Such transactions reduce the level of central bank reserves in the banking system and reduce structural liquidity. When the government borrows money by issuing of bonds and bills, reserves in the banking system are reduced. When government securities mature, reserves are transferred back to the banks’ account in the central bank. Norges Bank’s foreign exchange transactions will also affect structural liquidity. For example, when Norges Bank sells foreign currency, structural liquidity is reduced by the equivalent amount of NOK.

The structural liquidity forecast is updated frequently in the light of new information. There may be large variations throughout the year. Since the forecast is based on the previous year's liquidity flows, the uncertainty surrounding the forecast will increase around movable public holidays. In the case that the structure of payment deadlines for taxes is changed compared with the previous year, the accuracy of the forecast will also be affected. There is also uncertainty surrounding the volume of payments to and from the government’s account. These may vary given the state of the economy and changes in regulations.

Edited 8 December 2020 14:15