Monetary policy instruments

Standing facilities

The Riksbank offers its monetary policy counterparties the opportunity to place liquidity with the Riksbank overnight in the deposit facility at the policy rate minus 0.10 percentage points. There is no limit on how much a monetary policy counterparty may deposit in the facility.

The Riksbank also offers its monetary policy counterparties overnight credit against adequate collateral. There are two lending facilities: the standing lending facility, where counterparties borrow at the policy rate plus 0.10 percentage points, and the supplementary liquidity facility, where the interest rate is the policy rate plus 0.30 percentage points. There is no limit on the amount that a monetary policy counterparty may borrow in each facility, provided that the counterparty holds sufficient collateral.

The management of the standing facilities is automated. This means that any surplus in a monetary policy counterparty’s RIX account at the end of the day is automatically converted into a deposit in the deposit facility. A deficit in the RIX account at the end of the day is interpreted as a request for credit. The credit is first granted in the standing lending facility and then, if the collateral in that facility does not cover the entire shortfall, in the supplementary liquidity facility.

The interest rates on the standing deposit and lending facilities form a narrow, symmetrical corridor around the policy rate. The corridor provides monetary policy counterparties with an incentive to balance liquidity amongst themselves at interest rates that do not deviate from the policy rate by more than 0.10 percentage points.

To borrow from the Riksbank, counterparties must provide collateral. The collateral accepted by the Riksbank is divided into a primary and a secondary collateral pool. The standing loan facility accepts collateral from the primary collateral pool, which consists of government securities and central bank claims. In the supplementary liquidity facility, collateral from the secondary pool of eligible assets is accepted, such as covered bonds.

Market Operations

Market operations is a collective term for different types of transaction that the Riksbank can carry out to fulfil its monetary policy objectives. They can be used to signal the interest rate level that should be established in the Swedish krona market and to influence liquidity in the banking system. Market operations may, for example, include secured loans, repurchase agreements, the purchase and sale of securities, the issuance of Riksbank certificates and currency swaps.

By offering monetary policy counterparties the opportunity to deposit or borrow liquidity at the policy rate, the Riksbank can influence interest rates in the Swedish krona market and signal the level at which interest rates should be set.

Market operations may be carried out to temporarily or permanently influence the banking system’s liquidity position with regard to the Riksbank. When the banking system has a structural liquidity surplus, the Riksbank drains liquidity, whilst the Riksbank injects liquidity when the banking system has a structural liquidity deficit.

The market operations carried out by the Riksbank depend on monetary policy requirements and conditions in the financial markets. Read more about current market operations on the Market operations page