Preventing financial crises

A crisis in the financial system may lead to large economic costs and involve economic decline, bankruptcies and rising unemployment. It is therefore important to prevent financial crises through communication regarding risks and by remaining alert to changes and vulnerabilities that could lead to a serious financial crisis.

The Riksbank draws the attention of banks and other participants on the financial markets to risks that the Riksbank has identified. This aims to encourage the participants themselves to take measures to dampen their risk-taking and strengthen their resilience.

The Riksbank prevents financial crises by:

  • gathering information on the financial system
  • regularly analysing and monitoring the financial system
  • to prevent threats to financial stability by highlighting and warning of risks and, in some cases, recommending specific measures to mitigate risks
  • cooperating with other authorities in Sweden and abroad
  • influencing the form of financial regulatory frameworks so that they contribute to stability and efficiency.

Good crisis preparedness

A high level of preparedness is also an important part of the work on preventing financial crises. To be able to manage a crisis it is important to have an efficient crisis organisation with routines for decision-making and various support measures. The Riksbank therefore regularly conducts crisis management exercises together with Swedish and foreign authorities and with organisations in the private sector. This enables us to maintain our knowledge and expertise and to further develop our crisis organisation.

Cooperation between authorities

As the Riksbank shares responsibility for managing a financial crisis with the government, the National Debt Office and Finansinspektionen these authorities must cooperate closely.

Cooperation between central banks

Banks with subsidiaries and branches in several countries play an important role in the financial markets of the Nordic and Baltic countries. Cross-border banking groups provide benefits and improve efficiency in the financial system. At the same, they increase the risk that a problem arising in one bank or banking group can affect financial stability in more than one country. Agreements on information-sharing and cooperation between central banks is therefore important for the work of preventing financial crises.

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Updated 19/05/2022