Operational framework for the implementation of monetary policy

The monetary policy operational framework is used to implement the Executive Board’s monetary policy decisions. The Riksbank steers the shortest money market rate, the overnight rate, towards the current level of the policy rate. The task of the framework is to steer the overnight rate and influence short-term market rates so that they are sufficiently close to the policy rate. By influencing short-term market rates, the Riksbank affects longer-term market rates and thereby also the interest rates faced by households and companies. To implement monetary policy, the Riksbank needs to be able to carry out transactions with financial companies that are active in Swedish financial markets to influence the formation of interest rates in Swedish kronor.

The operational framework consists mainly of counterparties, instruments and collateral. Counterparties are the financial companies that have access to the Riksbank’s monetary policy instruments, standing facilities and market operations, and collateral is the financial assets the Riksbank accepts in exchange for providing credit to a counterparty.