Government proposes strengthening Riksbank’s financial independence

The Ministry of Finance today submitted a proposal that would strengthen the financial independence of the Riksbank by setting down in law a targeted level for its capital. The proposal also contains rules on how the Riksbank is to be recapitalised and how dividends to the State may be paid. In addition, it clarifies that borrowing in advance for the foreign exchange reserve may only be done if there are exceptional grounds. This proposal is in line with the Committee on Finance’s report from June 2016 which had the support of all parties represented in the Riksdag.

The Ministry of Finance today submitted a proposal under which the Riksbank will only distribute money to the State if its own capital exceeds SEK 60 billion. The level will be adjusted upwards according to inflation to ensure that, in the future, the Riksbank is not dependent on appropriations from the Riksdag. The capital can be invested so that the Riksbank can cover its costs by a comfortable margin, which will strengthen the Riksbank's independence.

"The issue of the Riksbank's financial independence has been unresolved for nearly two decades, and has been examined several times. I am pleased that now, with broad support in the Riksdag, we can present a proposal that remedies this," says Minister for Finance Magdalena Andersson.

The memorandum also contains proposals on rules for how borrowing for the foreign exchange reserve may be done. The role of the foreign exchange reserve has decreased over time, as Sweden has long had a floating exchange rate. However, in crisis situations the need may arise to provide the financial markets with liquidity in foreign currency. The Riksbank must then be able to borrow foreign exchange via the Swedish National Debt Office. On the other hand, the Riksbank will not have unconditional drawing rights for the purpose of increasing its foreign exchange reserve.

"The size of Sweden's national debt is decided by the Swedish Riksdag. This proposal means that the Riksbank must repay currency loans corresponding to five per cent of Sweden's GDP," says Minister for Financial Markets Per Bolund.

As the government bonds issued to finance the foreign exchange reserve mature, the foreign assets will be sold. This means that taxpayers' costs for the national debt will decrease by about SEK 500 million annually. Upon maturity, the Swedish national debt will decrease by 20 per cent over time.

Contact

Anna Söderström
Press Secretary to Minister for Financial Markets and Consumer Affairs Per Bolund
Phone (switchboard) +46 (0)8-405 10 00
Mobile + 46 72 532 17 13
email to Anna Söderström, via senior registry clerk
Adriana Haxhimustafa
Press Secretary to Minister for Finance Magdalena Andersson
Phone (switchboard) +46 (0)8-405 10 00
Thomas Hagberg
Deputy Director/Financial Markets and Institutions
Phone +46 8 405 39 30