As Libor is a reference rate that is used globally for large volumes of contracts, it is quite inacceptable that individual banks should casually report incorrect figures. The Riksbank has long followed developments concerning the corresponding reference rate in Sweden, known as Stibor. We are currently carrying out our own investigation into how Stibor is determined and we also have an on-going dialogue with the Swedish banks on how they need to strengthen governance and increase transparency with regard to Stibor. I assume that Swedish banks will take heed of what has happened with Libor and help reinforce confidence in Stibor. It is  4  BIS central bankers’ speeches  possible that we may need to wait and see what happens with Libor before we can establish a better model for Stibor, but meanwhile Swedish banks should make it clear to the market and the general public how Stibor is set on a daily basis and what controls and checks exist in the current organisational framework. The Riksbank’s investigation is not yet complete, but will be presented during the autumn. Weak developments in Europe and some uncertainty over the strength of the US recovery If we move on to the economic statistics released during the summer, they have mostly concerned developments during the second quarter, that is, up to the end of June. However, there have also been some indicators for the third quarter. To summarise, one can say that developments abroad have largely been in line with the assessments we made in July.
But during the second half of July, concerns increased again when reports were received of the weak finances in Spanish regions. This contributed to new speculations regarding whether the loan to the Spanish banks is sufficient, or whether it will be necessary to implement a full-scale support package for Spain. Yields on Spanish government bonds with both short and long maturities rose to new heights. Italy was also affected by the unease. At the same time, yields on German and French government bonds remained at extremely low levels. The problematic situation on the bonds markets was discussed by the European Central Bank, ECB, at the beginning of August. After the meeting, ECB Chairman Mario Draghi made it clear that countries needing acute assistance should first turn to the EFSF/ESM and accept support under the terms they stipulate. After interventions might be undertaken by the ECB, within its mandate for price stability, and the ECB will investigate potential measures. It was already clear that potential bond purchases by the ECB would focus on bonds with shorter maturities. Expectations were fairly high prior to the ECB meeting, and Spanish and Italian bond yields had fallen during the days before the meeting. When the ECB did not announce any immediate measures, yields rose quite strongly at first. They have since fallen somewhat again, primarily yields on government bonds with shorter maturities.