The Riksbank's operational framework for the implementation of monetary policy – an overview
Date
26/03/2014
The Riksbank's current operational framework was launched in 1994 and has worked well, both in normal times and during the financial crisis. This is the conclusion of The Riksbank's operational framework for the implementation of monetary policy – an overview . The fact that the operational framework for the implementation of monetary policy has largely functioned well is shown in that:
The operational framework has succeeded in the task of stabilising the overnight rate close to the repo rate – even during the financial crisis.
The volatility of the overnight rate remained relatively low during the financial crisis.
The extraordinary loans in both SEK and USD at shorter and longer maturities could be implemented efficiently during the financial crisis. Moreover, the operational framework has become more robust, thanks to the measures taken as a result of the financial crisis.
The overview includes a survey of other central banks' operational frameworks, a description of how the Riksbank stabilises the shortest interest rate in practice and a study of the efficiency of the Swedish overnight market now and during the financial crisis. The overview has also identified a number of issues the Riksbank may consider working on to further improve the efficiency of the system and to increase preparedness for future financial crises.
About the operational framework for the implementation of monetary policy:
The Riksbank's operational framework shall be designed to enable the Riksbank to control interest rates and thus affect growth and inflation. The operational framework thus plays a decisive role in the Riksbank attaining its price stability objective. The Riksbank shall also promote a safe and efficient payment system. This makes particular demands of the operational framework. In particular, one needs to take into account how the framework should be designed to enable the Riksbank to quickly and efficiently supply liquidity to the financial sector in the event of a crisis.
