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Sveriges Riksbank, or simply the Riksbank, is the
central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...
of
Sweden Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
. Founded in 1668, it is the world's oldest surviving central bank, and the third oldest bank in continuous operation. Prior to World War I, it was also the only state-owned central bank outside of the
Russian Empire The Russian Empire was an empire that spanned most of northern Eurasia from its establishment in November 1721 until the proclamation of the Russian Republic in September 1917. At its height in the late 19th century, it covered about , roughl ...
.


Etymology

The first part of the word ''riksbank'', ''riks'', stems from the Swedish word ''rike'', which means ''realm'', ''kingdom'', ''empire'' or ''nation'' in English. A literal English translation of the bank's name could thus be ''Sweden's Realm's Bank''. The bank, however, does not translate its name into English but rather uses its Swedish name ''the Riksbank'' in its official English-language communications also.


History

The Riksbank began operations in 1668. Previously, Sweden was served by the Stockholms Banco (also known as the Bank of Palmstruch), founded by Johan Palmstruch in 1656. Although the bank was private, it was the
king King is a royal title given to a male monarch. A king is an Absolute monarchy, absolute monarch if he holds unrestricted Government, governmental power or exercises full sovereignty over a nation. Conversely, he is a Constitutional monarchy, ...
who chose its management: in a letter to Palmstruch, he gave permission to its operations according to stated regulations. But Stockholms Banco collapsed as a result of the issuing of too many notes without the necessary collateral. Palmstruch, who was considered responsible for the bank's losses, was condemned to death, but later received clemency. On 17 September 1668, the privilege of Palmstruch to operate a bank was transferred to the ''Riksens Ständers Bank'' () and was run under the auspices of the parliament of the day. Due to the failure of Stockholm Banco, the new bank was managed under the direct control of the Riksdag of the Estates to prevent the interference from the king. When a new
Riksdag The Riksdag ( , ; also or , ) is the parliament and the parliamentary sovereignty, supreme decision-making body of the Kingdom of Sweden. Since 1971, the Riksdag has been a unicameral parliament with 349 members (), elected proportional rep ...
was instituted in 1866, the name of the bank was changed to Sveriges Riksbank. Having learned the lesson of the Stockholms Banco experience, the Riksbank was not permitted to issue bank-notes. Nevertheless, in 1701, permission was granted to issue so called "credit-notes". Some time in the middle of the 18th century, counterfeit notes began appearing, which caused serious problems. To prevent forgeries, it was decided that the Riksbank should produce its own paper for bank-notes and a paper-mill, Tumba Bruk, was founded in Tumba, on the outskirts of Stockholm. A few years later, the first commercial banks were founded and these were also allowed to issue bank-notes. The bank-notes represented a claim to the bank without
interest In finance and economics, interest is payment from a debtor or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct f ...
paid, and thus became a considerable source of
income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. F ...
for banks. Nonetheless, security in the form of a deposit at the Riksbank was required to cover the value of all notes issued. During the 19th century, the Riksbank maintained a dominant position as a credit institution and issuer of bank-notes. The bank also managed national trade transactions as well as continuing to provide credit to the general public. The first branch-office was opened in 1824, later followed with subsidiary branches opening in each county (''län''). The present operational activities as a central bank differ from those during the 19th century. For example, no interest-rate-related activities were conducted. The position of the Riksbank as a
central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...
dates back to 1897, when the first Riksbank Act was accepted concurrently with a law giving the Riksbank the exclusive right to issue bank-notes. This
copyright A copyright is a type of intellectual property that gives its owner the exclusive legal right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, ...
concluded its role and importance regarding
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...
in a modern sense, as the exclusive right to issue notes is a condition when conducting monetary policy and defending the value of a currency. Behind the decision were repeated demands that the private banks should cease to issue notes as it was considered that the ensuing profits should befall the general public. The Swedish currency was backed by gold and the paper-certificates could be exchanged for gold coins until 1931, when a specialized temporary law freed the bank from this obligation. This law was renewed every year until the new constitution was ratified in 1975 which split the bank from the government into a stand-alone organization not obligated to exchange notes for gold. In November 1992, the
fixed exchange rate A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a currency basket, basket of other currenc ...
regime of the
Swedish Krona The krona (; plural: ''kronor''; sign: kr; code: SEK) is the currency of Sweden. Both the ISO code "SEK" and currency sign "kr" are in common use for the krona; the former precedes or follows the value, the latter usually follows it but, espec ...
collapsed. A few months later, in January 1993, the Governing Board of the Riksbank developed a new monetary policy regime based on a floating exchange rate and an inflation target. These policies were extensively influenced by assistance from the
Bank of Canada The Bank of Canada (BoC; ) is a Crown corporations of Canada, Crown corporation and Canada's central bank. Chartered in 1934 under the ''Bank of Canada Act'', it is responsible for formulating Canada's monetary policy,OECD. OECD Economic Surve ...
, which had extensive previous experience controlling
inflation In economics, inflation is an increase in the average price of goods and services in terms of money. This increase is measured using a price index, typically a consumer price index (CPI). When the general price level rises, each unit of curre ...
, while being a similar small open economy, heavily subject to foreign exchange rate swings. From 1991 to 1993, Sweden experienced its most severe
recession In economics, a recession is a business cycle contraction that occurs when there is a period of broad decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be tr ...
since the 1930s termed the " Swedish banking rescue". It forced inflation down to around 2%, and inflation continued to be low during the subsequent years of strong growth in the late 1990s. During the 2000s, the operations and administrative departments were downsized on behalf of the policy departments Financial Stability Department and Monetary Policy Department. A direct consequence of the changing times was that the Riksbank closed down all its branches in Sweden and outsourced the handling of coins and bills to a private company. Today the policy departments are the core of the central bank and they employ about half of the bank's 350 full-time posts.


Motto

The motto of the Bank is ''Hinc robur et securitas'', which is
Latin Latin ( or ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally spoken by the Latins (Italic tribe), Latins in Latium (now known as Lazio), the lower Tiber area aroun ...
for "Herefore strength and security" (''"Härav styrka och säkerhet"'').


Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel

Following its third centennial in 1968, the bank instituted the annual Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, which is awarded with the
Nobel Prize The Nobel Prizes ( ; ; ) are awards administered by the Nobel Foundation and granted in accordance with the principle of "for the greatest benefit to humankind". The prizes were first awarded in 1901, marking the fifth anniversary of Alfred N ...
s at the Prize Award Ceremony in
Stockholm Stockholm (; ) is the Capital city, capital and List of urban areas in Sweden by population, most populous city of Sweden, as well as the List of urban areas in the Nordic countries, largest urban area in the Nordic countries. Approximately ...
, on 10 December, the anniversary of Alfred Nobel's death.


Innovative monetary policy initiatives

The Riksbank has a reputation for innovation among central banks due to implementing policies such as:


Negative interest rates

On 2 July 2009, Sweden's Riksbank was the first central bank in the world to implement a negative interest rate, when it lowered its repo rate (the rate at which a central bank lends short-term money to commercial banks against securities) to 0.25%. This caused its linked overnight deposit rate (the interest commercial banks get for depositing money with the central bank overnight) to be pushed down to −0.25%, while the overnight lending rate (the interest a central bank charges commercial banks for overnight lending) was lowered to 0.75%. This was done to counter economic slowdown due to the
2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
. The bank's Deputy Governor Lars E. O. Svensson stated that he had preferred a cut of the repo rate to 0.00%, as this would "entail a better balanced monetary policy, with lower unemployment and higher resource utilisation without inflation deviating too far from the target." The Swedish move to a negative discount rate was followed with great interest by central banks around the world. On 28 October 2014, the Riksbank cut its repo rate to 0.00%, as Deputy Governor Svensson advocated in July 2009, pushing the linked deposit rate to −0.75%, while the lending rate remained at 0.75%. On 12 February 2015, the bank again lowered the repo rate to −0.10%. The Riksbank announced at the same time that it would buy government bonds for SEK 30 billion, and that more measures would likely follow. The deposit rate was lowered to −0.85%, and the lending rate to 0.65%.Repo rate table 2015
Sveriges Riksbank Linked 2015-04-10
On 18 March 2015, the Riksbank cut the repo rate even further, to −0.25%. The bank announced at the same time that it was buying government bonds worth SEK 30 billion (US$3.4 billion, €3.2 billion) to prevent an appreciating krona from hindering an uptick in inflation. Inflation has been close to zero in Sweden since late 2012 and in February it was at 0.1%, far below the target of 2.0%, and the purpose of these moves was to stimulate inflation. The bank announced that it intends to keep the rate at −0.25%. "at least until the second half of 2016." The deposit rate was as a consequence lowered to −1.00% and the lending rate to 0.50%. The Riksbank has consequently lowered the rate two additional times, first on 8 July 2015 down 0.10 percentage points to −0.35 and most recently, on 17 February 2016 it was down another 0.15 points to −0.50. The accompanying deposit and lending rates now lies at −1.25 and 0.25, respectively.''Repo rate table 2016''
Sveriges Riksbank: Linked 2016-07-15
Since 2020 the repo rate (now known as ''styrränta'', policy rate) has been 0.0 or above.


E-krona

Facing a natural drop in the use of cash by the Swedish population, the Riksbank is pioneering the idea of introducing a central bank digital currency, the ''e-krona''. Such currency would have the same properties as cash, but in a digital form. In November 2016, the Bank announced an ambitious research programme in order to help the bank decide whether it should start issuing ''e-krona''. The Bank released its first interim report in September 2017 which outlined that "no major obstacles to the introduction of an e-krona have been identified". Following the announcement, scammers claiming to be selling Riksbank e-kronas have been targeting some consumers via telephone calls, even though as of the end of 2021 Riksbank has not decided yet whether it will issue an e-krona.False information regarding the sale of e-kronas
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Other Swedish banks

Nordea, Swedbank, Skandia, Länsförsäkringar,
Danske Bank Danske Bank A/S (, ) is a Danish multinational banking and financial services corporation. Headquartered in Copenhagen, it is the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail custome ...
, Handelsbanken, SEB, Volvofinans Bank, Färs & Frosta Sparbank, Ikano Bank, HQ Bank, Carnegie Investment Bank, ICA Banken, Avanza, Resurs Bank.


First Deputies

* Karl Langenskiöld, 1901–1912 * Victor Moll, 1912–1929 * Ivar Rooth, 1929 * Kerstin af Jochnick, 2012-2019 * Cecilia Skingsley, 2019-2022 * Anna Breman, 2022-


Governors

* Ivar Rooth, 1929–1948 * Klas Böök, 1948–1951 * Mats Lemne, 1951–1955 * Per Åsbrink, 1955–1973 * Krister Wickman, 1973–1976 * Carl Henrik Nordlander, 1976–1979 * Lars Wohlin, 1979–1982 * Bengt Dennis, 1982–1993 * Urban Bäckström, 1993 – 31 December 2002 * Lars Heikensten, 1 January 2003 – 31 December 2005 * Stefan Ingves, 1 January 2006–31 December 2022 * Erik Thedéen, 1 January 2023–


See also

* Economy of Sweden * Monetary policy of Sweden *
Swedish krona The krona (; plural: ''kronor''; sign: kr; code: SEK) is the currency of Sweden. Both the ISO code "SEK" and currency sign "kr" are in common use for the krona; the former precedes or follows the value, the latter usually follows it but, espec ...
* Riksdaler * Scandinavian Monetary Union * Sweden and the euro * Swedish National Debt Office * Södra Bankohuset * List of central banks


References


External links


Official website of Sveriges Riksbank

Historical Monetary Statistics of Sweden 1668–2008 published by the Riksbank
{{Coord, 59, 19, 54, N, 18, 03, 56, E, type:landmark, display=title Government of Sweden
Sweden Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
Sweden Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
Banks of Sweden Economy of Sweden Banks established in 1668 1668 establishments in Sweden Public finance of Sweden 17th-century establishments in Stockholm