What is financial stability?

The financial system must work well and be stable for the economy to function and grow.

The Riksbank's definition of financial stability is that the financial system must be able to maintain its basic functions and also be resilient to shocks.

Resilience to shocks promotes financial stability

For the financial system to function efficiently, it must be resilient to shocks. A shock may be that the ability of banks to fund their operations on the market is seriously weakened because market participants lose confidence in each other and are thus less willing to trade with each other. The financial system becomes more resilient if, for example, the banks have sufficient capital and liquid funds.

 

If, as a result of a financial shock, the banks cannot make payments to each other, they may not, for example, be able to make wage payments in time and private individuals will then find it difficult to pay their bills. This could quickly lead to chaos in the economy and disrupt financial stability, which in turn could lead to huge costs to society.

The Riksbank's work to promote financial stability

The Riksbank's work to prevent financial crises includes collecting, compiling and disseminating information about the financial system. We monitor and regularly conduct stability analyses of developments in the financial system and in the economy as a whole.

 

We share responsibility for promoting financial stability with Finansinspektionen (the Swedish Financial Supervisory Authority), the National Debt Office and the Ministry of Finance. All of these authorities have different roles in this work.

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What is financial stability?

Why is it important with financial stability and what role has the Riksbank.

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