The Riksbank plans to finance around SEK 200 billion of its foreign currency reserve through foreign currency loans via the Swedish National Debt Office, reducing currency risk and replacing existing foreign exchange (FX) swaps. The change is not intended to affect the reserve’s size over the long term and has no monetary policy purpose. Currency risk is the largest risk on the Riksbank’s balance sheet. Borrowing in the same currencies as reserve assets would allow exchange rate movements on assets and liabilities to offset each other, replacing part of the current financing against liabilities in Swedish kronor. Around SEK 100 billion of the planned borrowing would replace FX swaps used for hedging since 2023. The remaining SEK 100 billion would accompany sales of foreign currency for kronor, reducing currency exposure by a further corresponding amount. The purchases of kronor and settlement of swaps would also reduce the banking system’s liquidity surplus with the Riksbank. Implementation would provisionally begin in the first quarter of 2027, subject to stable market conditions, and is expected to take 12–18 months. Transactions would be spread evenly over that period to minimise their effect on the exchange rate. Further implementation details and a final decision are planned alongside the monetary policy decision in December.
Sweden's Riksbank plans SEK 200 billion in foreign currency loans to reduce currency risk
The Riksbank proposes borrowing around SEK 200 billion in foreign currency through the Swedish National Debt Office, replacing existing FX swaps and reducing currency exposure by a further SEK 100 billion. The change is not intended to alter the reserve’s size over the long term and has no monetary policy purpose. Subject to stable markets, implementation would start in the first quarter of 2027 and take 12–18 months, with a final decision planned for December.