Norges Bank prepares and publishes a forecast for the development of structural liquidity. An updated version is available Mondays and Thursdays on Norges Bank’s website.
Banks hold deposits in the form of central bank reserves in Norges Bank, which are used for settlements between banks or with the government. The term «structural liquidity» denotes the amount of reserves the banks hold at their account, disregarding 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 bank of banks, and the government holds an account in the central bank. The government’s cashflow of income and expenses results in large deposits being moved daily between banks’ accounts and the government’s account. This leads to large variations in the bank reserves in Norges Bank throughout the year. The government’s in- and outflow, 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 through supply of bonds and bills, reserves are reduced in the banking system. 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 light of new information. There may be large variations throughout the year. The forecast is based on the liquidity flow of the previous year, and its uncertainty will therefore increase around movable public holidays. In the case that the structure of payment deadlines for taxes and fees is changed compared to the previous year, the accuracy of the forecast will also be affected. There is also uncertainty tied to the size of payments to and from the government’s account. These may vary given the state of the economy and changes in regulations.