Purchases of government bonds
Since February 2015, the Riksbank has purchased government bonds with the aim of making monetary policy more expansionary. Such loans help bring down the general level of interest rates in the economy which, in turn, leads to increased general demand. To mitigate the effects of the corona pandemic on the Swedish economy, the Riksbank aims to purchase securities, including government bonds, in a further amount of up to SEK 300 billion in 2020.
A central bank can make monetary policy more expansionary by purchasing government bonds on the secondary market. When yields for safe assets fall as a consequence of the central bank’s purchases of government bonds, it becomes more attractive for investors to turn to alternative assets. In this way, the lower yields for government bonds spread onwards to other parts of the financial markets. In turn, the lower level of interest rates helps the banks cut rates for loans and deposits, which increases companies’ willingness to invest, at the same time as households are given increased incentive to consume. Following the rising asset prices, the wealth of both households and companies increases at the same time. All in all, general demand in the economy increases and, eventually, inflation rises too.
In February 2020, the Riksbank’s holdings of government bonds amounted to a nominal amount of just under SEK 340 billion. The actual holding of government bonds is reported on the page Holdings.
To mitigate the effects of the corona pandemic on the Swedish economy, the Riksbank now needs to extend its purchases of government bonds with the aim of keeping monetary policy expansionary and providing support to the economy.
General and specific terms and conditions apply to participation in the Riksbank’s purchase auctions. The general terms can be found under related content, and the specific terms under "Auction announcements". Registration forms for new counterparties to register their participation with the Riksbank are also available under related content. A monetary policy counterparty that has already registered with the Riksbank only needs to confirm that previous registration with pertinent information still applies and, if confirmation has already been carried out, no extra confirmation is needed.