Managing a financial crisis
It is important to have good crisis management so that costs to society do not become too high in the event of a financial crisis.
The Riksbank can manage a financial crisis in different ways:
- by taking liquidity support measures to counter serious disruptions in the financial system
- by communicating the Riksbank's assessments
- by cooperating with other authorities in Sweden and abroad
Liquidity support measures to counter serious disruptions
Times of unrest and great uncertainty are often characterised by a deterioration in liquidity in the financial markets. This means that it becomes more difficult and more expensive to obtain funding for those agents who need it. This is due to the fact that the agents offering financing feel that the risks have increased and therefore require more payment or hesitate to offer funding. When the financial markets do not function properly, there is a risk of severe consequences for the economy. To counter serious disturbances in the financial system in Sweden and to ensure that it can maintain its basic functions (mediating payments, providing credit and managing risks), the Riksbank has several possibilities to provide liquidity to the system. It can either be provided to several players at the same time, so-called general liquidity support, or it can take the form of assistance to a single financial company, so-called emergency liquidity assistance.
Communication in a crisis
Communication and information are central elements of the Riksbank’s crisis management. By providing open and clear communication on problems and measures, the Riksbank can help to create confidence in the financial system in a crisis situation.
If there is unease or a crisis in the financial system, the Riksbank’s overall assessments of financial stability need to be presented more rapidly and more often. If communication is to be clear, it is particularly important to carefully consider what is to be communicated, when this communication is to take place and how.