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 by identifying and analysing vulnerabilities and risks that could lead to a serious financial crisis and communicating around these.

The Riksbank draws the attention of banks and other participants in the financial system to risks that the Riksbank has identified. This is aimed at encouraging the participants themselves to take measures to dampen their risk-taking and strengthen their resilience. The Riksbank also informs other authorities and other interested parties of serious risks that may affect the activities of other authorities.

Oversight of risks and vulnerabilities and design of the regulatory framework

The Riksbank works in several ways to prevent financial crises:

• gathering information on the financial system

• regularly analysing and monitoring the financial system

• preventing threats to financial stability by alerting and warning of risks and vulnerabilities and, in some cases, pointing out how they can be counteracted

• 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

The Riksbank shall have ample capacity to counteract severe disruptions in the financial system in Sweden. This is also an important part of the work of 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 with other authorities in Sweden

As the Riksbank shares responsibility for managing financial crises with the government, the Swedish National Debt Office and Finansinspektionen, these authorities must cooperate closely in both crisis preparedness work and crisis management.

Cooperation with central banks and other authorities in other countries

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 with central banks and other authorities in other countries are therefore important for the work of preventing financial crises.

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Updated 03/01/2023