The tasks of the Riksbank
The Riksbank is Sweden's central bank and an authority under the Riksdag, the Swedish parliament. The Riksbank's work entails issuing money and ensuring that they retain their value over time. This is known as monetary policy and the objective is to hold inflation, that is, the general increase in prices, at a low and stable level. The Bank also has the task of ensuring that payments in the economy can be made safely and efficiently.
Inflation target and policy rate - monetary policy
Under the Sveriges Riksbank Act, the Riksbank shall maintain price stability, which means that inflation should be low and stable. The Riksbank has specified an inflation target, according to which the annual change in the consumer price index with a fixed interest rate (the CPIF) is to be 2 per cent. The Riksbank's monetary policy is aimed at attaining the inflation target, and at the same time it is to support the objectives of general economic policy with a view to achieving sustainable growth and high employment.
The Riksbank determines the level of its policy rate to influence inflation and economic developments. The policy rate is the interest rate charged to banks who borrow from or deposit money with the Riksbank. The policy rate affects other interest rates in the economy and ultimately economic activity and inflation.
A safe and efficient payment mechanism – financial stability
The Riksbank has the Riksdag's mandate to promote a safe and efficient payment mechanism. This means that the Riksbank shall act to promote stability in the Swedish financial system as a whole. The mandate also includes issuing banknotes and coins. In addition, the Riksbank provides an electronic payment system, RIX, which handles large value payments between banks and other actors in a safe and efficient way.
The Riksbank analyses the stability of the financial system on a continuous basis in order to detect, at an early stage, changes and vulnerabilities that could lead to disruptions. The analysis focuses primarily on the major Swedish banking groups, the functioning of the financial markets and the financial infrastructure required for the payments and the financial markets in Sweden to function smoothly. In a crisis situation, the Riksbank may in certain circumstances provide temporary liquidity assistance to banks.
The Riksbank's independence
The Riksbank is a public authority under the Riksdag. The Riksdag appoints the members of the Riksbank's General Council. The General Council in turn appoints the members of the Riksbank's Executive Board. The General Council also supervises and scrutinises the work of the Executive Board.
The Riksdag has given the Riksbank an independent status. This means that the Executive Board of the Riksbank makes the monetary policy decisions without instruction from any other parties. By delegating the task of maintaining inflation at a low and stable level to the Riksbank, the Riksdag has ensured that monetary policy is based on a long-term perspective and that there is a sound basis for the credibility of the inflation target.