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Financial Statements<br />
Realized Gains and<br />
Losses and Revaluation<br />
Differences and Their<br />
Treatment in the<br />
Financial Statements of<br />
December 31, <strong>2004</strong><br />
Realized Realized Unrealized Change in<br />
gains<br />
losses<br />
losses revaluation<br />
(posted to the profit and loss account)<br />
accounts<br />
EUR million EUR million EUR million EUR million<br />
Gold<br />
Foreign currency<br />
84.551 — — —114.023<br />
holdings for own account 59.842 6.535 254.179 1<br />
Risk Management<br />
Financial and operational risk incurred<br />
in connection with central<br />
banking activities have a crucial impact<br />
on the financial result of an<br />
entity and on its ability to continue<br />
as a going concern. The OeNBÕs risk<br />
management is based on binding<br />
rules, risks are determined by means<br />
of recognized procedures, and risk<br />
control is guaranteed through continuous<br />
monitoring. Moreover, there are<br />
regular reporting procedures.<br />
Financial Risks<br />
Financial risk covers a range of collateral-related<br />
risks, basically market,<br />
credit and liquidity risk. Reserve<br />
asset and risk management principles<br />
are laid down in a rule book adopted<br />
by the OeNBÕs Governing Board. The<br />
investment of reserve assets is governed<br />
by a benchmarking system<br />
and subject to defined limits and<br />
—3.129<br />
own funds 0.521 0.034 — +1.028<br />
Securities<br />
holdings for own account 116.037 29.743 7.579 —42.642<br />
own funds 8.933 0.008 0.582 —7.410<br />
IMF euro holdings 29.859 — — —<br />
Participating interests — — 0.992 —4.790<br />
Off-balance sheet instruments 8.651 7.552 0.211 —2.490<br />
Total 308.394 43.872 263.543 —173.456<br />
1 This amount did not have an impact on profit because the loss was offset against the reserve for nondomestic and price risks.<br />
durations. Moreover, the OeNB holds<br />
separately managed investment portfolios<br />
for different asset types and<br />
currencies. Regular reports are made<br />
to an investment committee and to<br />
the Governing Board of the OeNB.<br />
The Governing Board must authorize<br />
diversification options to include new<br />
types of investment.<br />
Market Risk<br />
Market risk is the risk of exposure<br />
arising from movements in markets,<br />
in particular exchange rate and<br />
interest rate changes, as determined<br />
by generally recognized value-at-risk<br />
(VaR) calculation models. Exchange<br />
rate risk is controlled through a dual<br />
benchmarking system, namely strategic<br />
and tactical benchmarks. The strategic<br />
benchmarks, which are adopted<br />
by the Governing Board of the<br />
OeNB, as a rule for one-year periods,<br />
also define the upper exposure limits.<br />
84 ×<br />
<strong>Annual</strong> <strong>Report</strong> <strong>2004</strong>
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