20th century

Bild på gammal sedel1904 The Riksbank was granted a monopoly on issuing banknotes (the decision was actually taken in 1897). It was not until this decision had been made that the Riksbank could have monetary policy significance in the modern sense, as a monopoly on issuing banknotes is a necessary condition for controlling the monetary policy instruments. The monopoly was a result of the repeated request that the right to issue banknotes should be withdrawn from the private banks. It was considered that the profit made by the private banks on their banknotes, could go to the state instead.

Picture of hyperinflation in Germany1923 Hyperinflation in Germany. A United States dollar was worth one thousand billion (1,000,000,000,000) German marks.



Sweden abandoned the gold standard after speculation against the krona. In just three months the foreign exchange reserve fell from a value of SEK 300 million to SEK 30 million. The defence of the Swedish krona proved unsuccessful. A floating exchange rate was adopted and the krona depreciated by 30 per cent. At the same time, the Swedish Finance Minister of the time, Felix Hamrin, declared that the monetary policy target should be “to use all the available instruments to maintain the Swedish krona’s domestic purchasing power”. The Riksbank thus gained a price stability target as the norm for monetary policy.

1933 Following a period of a more or less floating exchange rate, the krona was pegged to the British pound in 1933.

Picture of a dollarnote1939 Sweden chose to peg the krona to the dollar instead of the pound, because of the high inflation rate in the United Kingdom. Monetary policy continued to be aimed at price stability.

1946 Revaluation of the krona by 14.3 per cent.

1949 Devaluation of the krona by 30.5 per cent against the US dollar.

1951 Sweden joined the Bretton Woods system. After World War Two, almost all western countries’ currencies were pegged to the United States dollar, which in turn had a fixed price against gold. The system came into force in 1944 and was called the Bretton Woods System. The system worked well as long as the countries followed the rules they had agreed on. However, when the inflation rate increased and the largest countries no longer coordinated their economic policy, the system collapsed in 1973.


To avoid the uncertainty in world trading that arises when countries must exchange currencies with one another, various fixed exchange rate systems have succeeded one another.

Picture of a coin1968 The Riksbank celebrates its 300th anniversary and makes a donation to the Nobel Foundation. This donation is used from 1969 for an annual prize in economic sciences “in memory of Alfred Nobel”. The assessment of who should receive the prize follows the Nobel regulations and the prize money is the same as the Nobel prizes.


1973 Sweden joins the currency snake. The countries that were EC members and their associates set up a cooperation called the currency snake, a system with exchange rates fixed within a certain margin against other members, but floating towards the rest of the world. The Swedish krona was now strongly linked to the German D-mark, which dominated the cooperation.

At the beginning of the 1970s, Sweden experienced substantial fluctuations in prices and wages, which resulted in a severe deterioration of its competitiveness. Sweden therefore wished to devalue the krona by 10 per cent. The members of the currency snake would only accept 6 per cent. Sweden therefore left the currency snake in 1977.

1976 Devaluation of the krona by 3 per cent against German D-mark.

1977 The krona was devalued twice; first by 6 per cent and later by 10 per cent. The Riksbank decided that the krona would in future be linked to a currency basket composed of the most important trading currencies. Each currency in the basket was given greater or lesser weight depending on its role in foreign trade. The US dollar was the dominant currency.

1981 The krona was devalued by 10 per cent, to improve the current account balance so the country would not need to incur further debts.

1982 The krona was devalued again. This time by 16 per cent, to create a competitive advantage for the Swedish business sector.

Picture of a flag1991 On 17 May 1991 the Riksbank decided to attach the krona to the European Currency Unit, the ecu. The link was unilateral. There was no agreement with the EC countries, and no obligation to maintain a particular exchange rate other than according to Sweden’s wishes. To begin with the ecu link appeared to provide increased confidence in the Swedish krona, but this proved temporary.

1992 The 500 per cent marginal rate is not enough. It was not possible to defend the fixed exchange rate any longer and Sweden allowed the krona to float.

1993 With a floating exchange rate, price stability becomes the overall target for monetary policy. The Riksbank specifies the target as 2 per cent inflation +/- one percentage point.

1999 The Riksbank is formally granted an independent status. A new Executive Board is appointed to make decisions on monetary policy and the price stability objective is confirmed by law.

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