Riksbank offers deposit facility to central counterparties
Press release The Riksbank is offering central counterparties the opportunity to place money overnight with the Riksbank. Access to this deposit facility increases the possibility for central counterparties to manage their liquidity buffers. This reduces the risk that shocks can spread through the financial system and counteract the impact of the Riksbank’s monetary policy.
The Riksbank is offering, with effect from 1 November 2018, a deposit facility for central counterparties to help prevent shocks to their management of liquidity in Swedish krona spreading in the financial system and counteracting the impact of the Riksbank's monetary policy. The deposit facility means that central counterparties that manage transactions in Swedish krona and are participants in the RIX system may place money overnight in the Riksbank. This will improve the central counterparties’ capacity to manage their liquidity in Swedish krona.
Deposit facility offered for monetary policy reasons
The deposit facility for central counterparties is being offered for monetary policy purposes, at an interest rate corresponding to the Riksbank's deposit rate for standing facilities offered to the Riksbank's monetary policy counterparties.
Central counterparties are important to the financial system
A central counterparty is a company that acts as intermediary when other actors take part in financial transactions. Over the past ten years, there has been a considerable increase in the significance of central counterparties for the functioning of the financial system. This means that there can be shocks to the financial system if a central counterparty has problems placing liquidity from unplanned payments sufficiently quickly and safely. Ultimately, such problems can affect interest rates on financial instruments in a way that counteracts the impact of monetary policy. Several central banks therefore offer special deposit facilities for central counterparties to facilitate the management of their liquidity and reduce the risk of shocks to the financial system.