Annual Report 2004

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gains on the back of high domestic demand, sound profit margins and favorable financing conditions. The gain in oil prices was instrumental in driving up inflation from 2.3% in 2003 to 2.7% in 2004. At 4.4% of GDP, the U.S. budget deficit stayed high in 2004. The U.S. twin (budget and current account) deficit was partly responsible for the U.S. dollarÕs weakness in 2004 (see box 3) and weighs on medium-term U.S. growth prospects. International Exchange Rates, Foreign Exchange Reserves Box 3 andGoldReserves International Exchange Rates and Foreign Exchange Reserves The U.S. currencyÕs continued downtrend against the euro since 2001 remained more or less unbroken throughout 2004. Whereas the U.S. dollar strengthened substantially until the end of May — on May 13, 2004, it stood at USD 1.18 to the euro — the dollar started to slip again in fits and starts during the summer and depreciated considerably during the fourth quarter of 2004. Foreign Exchange Reserves USD billion 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1999 2000 2001 2002 2003 2004 Asia U.S.A. Euro area Japan Rest of the world Source: IMF statistics, BIS. The Eurosystem Secures Price Stability Annual Report 2004 × 25
The Eurosystem Secures Price Stability Central Bank Gold Reserves With market participants paying close attention to the issue of the sustainability of exter- Tons nal imbalances, reports about the enlarge- 14,000 ment of the twin deficit — the shortfalls on 12,000 the U.S. current account and the budget — also acted as a damper on the dollarÕs value. 10,000 Yet until the late summer, the data signaled 8,000 that net U.S. liabilities did not represent a 6,000 major financing burden. Expected and actual interest rate hikes by the U.S. Federal Reserve 4,000 System secured the attractiveness of the U.S. 2,000 markets for investment compared with other financial centers. 0 U.S.A. Euro area Austria Source: IMF statistics, BIS. 1 Even when private sector capital flows began to shrink as investors were reassessing the profitability of holding dollardenominated investments, the principal Asian monetary authorities still hoarded substantial amounts of U.S. dollars in an effort to uphold their currenciesÕ parities to the U.S. dollar, thus financing the U.S.A. 2 The rapid slide in the value of the U.S. dollar against the euro in the fourth quarter of 2004 was set off above all by expectations that U.S. business activity was letting up, as reflected by flagging industrial output, disappointing labor market data and deteriorating consumer confidence. Moreover, the persistently high oil price stoked fears that the economy would suffer. New Central Bank Gold Agreement The gold price broadly mirrored the USD/EUR exchange rate changes in 2004, bottoming out on May 5, 2004, at around USD 372 per fine ounce and then rising gradually to about USD 457 per fine ounce by the end of November. The OeNB has been able to pursue a profitable, active gold policy, using e.g. gold leasing transactions within the framework of the Central Bank Gold Agreement. On March 8, 2004, 15 European central banks issued a joint statement on gold by which they renewed the gold agreement that expired on September 26, 2004, for another five years. The Bank of England left the agreement whereas the Bank of Greece joined. The gold sales already decided and to be decided by the undersigned institutions will be achieved through a concerted program of sales over a period of five years. Annual sales will not exceed 500 tons, and total sales over this period will not exceed 2,500 tons (previously: 2,000 tons). The participating central banks also agreed that the total amount of their gold leasings and the total amount of their use of gold futures and options would not exceed the amounts prevailing at the date of the signature of the previous agreement. 1 The Federal Reserve System raised the federal funds target rate step by step from 1.00% to 2.25% in the course of 2004 (measures taken at the Federal Open Market Committee meetings of June 30, August 10, September 21, November 10 and December 14). Market players had anticipated each of the 25 basis point hikes months in advance, and each move was discounted in the yield curves. 2 According to IMF statistics, AsiaÕs net currency reserves (excluding gold) alone widened from some USD 1.500 trillion to USD 1.787 trillion from the beginning of 2004 to November 2004. In the meantime, these countriesÕ foreign exchange reserves have attained such a large volume that even minor portfolio shifts have an impact on the exchange rate. 26 × Annual Report 2004
Page 1 and 2: √ Oesterreichische Nationalbank S
Page 4 and 5: ˆ Report on the Financial Year 200
Page 6 and 7: In 2004 the global economy expanded
Page 8: Financial Statements of the Oesterr
Page 11 and 12: GeneralCouncil(Generalrat),StateCom
Page 13 and 14: Organization Chart President Herber
Page 16: ˆ Report of the Governing Board (D
Page 19 and 20: The Eurosystem Secures Price Stabil
Page 25: The Eurosystem Secures Price Stabil
Page 39 and 40: The OeNB as a Competent Partner in
Page 49 and 50: Competition and transparency in cas
Page 51 and 52: Integration of Payment Services in
Page 63 and 64: ÒStability and SecurityÓ — the
Page 65 and 66: The OeNBÕs Information Policy —
Page 67 and 68: The OeNBÕs Information Policy —
Page 69 and 70: The OeNB — An Innovative, Dynamic
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ˆ Financial Statements of the Oest
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Liabilities December 31, 2004 Decem
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Notes to the Financial Statements 2
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Future market developments, especia
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The strategic measures are compleme
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Development of the OeNBÕs Currency
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SDRs equivalent to EUR 38.831 milli
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4 Claims on non-euro area residents
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such credit is provided not by the
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9.1 Participating interest in the E
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9.2 Claims equivalent to the transf
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Equipment developed as follows: Cos
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11.6 Sundry Sundry assets comprise
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The table below shows the annual av
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11 Items in course of settlement Cl
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13 Provisions Under the OeNBÕs ini
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15 Capital and reserves A summary o
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Notes to the Profit and Loss Accoun
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ance with Article 69 paragraph 1 of
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Governing Board (Direktorium) Gover
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Profit for the Year and Proposed Pr
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ˆ Notes
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x = No data can be indicated techni
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Core inflation: inflation measure t
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Primary balance: government net bor
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Periodical Publications of the Oest
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Artwork All artwork featured in thi
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The Annual Report of the OeNB provi
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