Can the measures taken by the Riksbank as a result of the coronavirus lead to hyperinflation?
Hyperinflation usually arises when a state's expenditure soars and the central bank begins to finance this expenditure on a broad scale. In other words, it is a situation when normal tax revenue is not sufficient to pay the current and future expenses. Hyperinflation can be regarded as a tax on money that finances the expenditure when it soars too high. The measures that are being taken by the Riksbank now are aimed at facilitating the supply of credit in the economy and thereby reducing the turbulence on the financial markets and avoiding bankruptcies among both small and large companies. If the Riksbank did not take these measures, there is a considerable risk that economic activity would fall more than necessary and that prices would fall. The measures themselves do not lead to hyperinflation, as they do not directly finance state expenditure.