Ingves at Riksdag Committee on Finance: The Riksbank is prepared to act

The spread of this virus will unavoidably have negative effects on economic activity. But it is as yet too early to determine the extent and duration of these effects. “To avoid robust companies being closed down during this period, economic policy as a whole may need to contribute support to affected sectors and access to credit and liquidity. The financial sector and the banks will of course also have to be prepared to make a contribution in this kind of situation,” says Stefan Ingves.

The Riksbank can act in a number of ways to subdue the negative effects of the virus on the economy. The great uncertainty factor can mean that liquidity does not flow where it is most needed. There is then a risk that the financial system could lose its capacity to maintain the credit that companies need to conduct their operations. 

“Our assessment right now is that maintaining the supply of liquidity is the most important thing. This could be more generous terms for loans to banks and/or direct purchases of securities. The Riksbank's earlier asset purchases have meant there is now plenty of liquidity in the system. In the current uncertain situation it is important that this continues to be the case. The Executive Board therefore assesses that the Riksbank's balance sheet should not be reduced in the coming year. We do not see a lower policy rate as the most important measure at present,” says Stefan Ingves.