FAQ about increased access to liquidity in Swedish kronor
The Riksbank has reduced the lending rate for overnight loans to banks from 0.75 percentage points above the repo rate (before the coronavirus pandemic) to 0.10 percentage points above the repo rate. What does this mean?
Put simply, this means that banks can lend money overnight at the Riksbank at lower interest rates than previously. This helps strengthen the financial system and improves the functioning of the fixed-income markets. It is therefore a measure aimed at avoiding a worsening of the economic consequences of the corona pandemic due to problems in the credit supply.
The Riksbank is offering banks the opportunity to borrow an unlimited amount of money on a weekly basis against collateral at three and six months’ maturity respectively at a variable interest rate corresponding to the repo rate. What does this mean and what is the purpose?
This means that banks can borrow money from the Riksbank at a low interest rate for a longer period, which is to say three and six months respectively. This measure aims to strengthen the financial system and improve the functioning of the fixed-income market.
The Riksbank is increasing flexibility over the collateral banks can use when borrowing money from the Riksbank. What does this mean and what is the purpose?
Banks will have more scope to use mortgage bonds as collateral when they borrow from the Riksbank. This makes it easier for them to borrow from the Riksbank and helps to reduce turbulence on the financial markets.