The Riksbank’s monetary policy measures during the financial crisis – evaluation and lessons learnt

Date 17/10/2012

In this article, Heidi Elmér, Gabriela Guibourg, David Kjellberg and Marianne Nessén analyse the monetary policy measures taken by the Riksbank during the financial crisis of 2008-2009, when the Riksbank implemented not only conventional measures, such as substantially cutting the repo rate to counteract the fall in demand for goods and services, but also a number of extraordinary measures. For example, the Riksbank offered SEK and USD loans to the Swedish banks at longer maturities. The aims of these loans were to ensure that there was sufficient liquidity in the financial system, to counteract the development of high risk premiums and to improve the monetary-policy transmission mechanism. These measures helped to lower both short- and long-term interest rates during the crisis, which meant, for example, that the banks' costs for funding new household mortgages could be kept down. Experience from the financial crisis shows that it is important for the Riksbank to be constantly prepared to quickly take appropriate extraordinary measures when the need arises.

 

The article is included in this year's third issue of the Sveriges Riksbank Economic Review, which has been published today.