The Riksbank has therefore taken powerful measures in recent weeks, the aim of which has been to enable normal companies to finance their activities. It is clear that companies are having problems doing this at the moment. Companies that obtain funding by issuing corporate bonds or commercial paper have been affected by the turbulence on financial markets and the periodically limited bond trading. From our conversations with business leaders throughout Sweden, it is also clear that the shortage of liquid funds is a major problem and several have also experienced a deterioration in their funding terms. The most vulnerable sectors are finding it most difficult to obtain loans from banks. In other words, there is a major need for loans to both small and large companies so that they can survive a period in which the economy risks freezing over. Although we will not be able to prevent this, it is a question of reducing the risk of viable companies being forced to close and lay off staff due to a lack of money. This could exacerbate the downturn in the economy and depress output and employment in the long term. 2 [5]  Seven measures in the space of two weeks As a first measure, the Riksbank has therefore launched a programme of corporate lending via our monetary policy counterparties. The aim is to support credit supply to Swedish companies.
This leads in turn to a rise in redundancies, something we have unfortunately seen in these last few weeks. Banks then become uncertain as to whether companies can pay back their loans. When uncertainty arises about the financial strength of companies, interest rates go up and it becomes more difficult for the financial system to mediate credit from lender to borrower. Investors, those who normally want to invest money to increase their returns, back away. When they do so, the functioning of other markets increasingly deteriorates. The Riksbank acts as a safeguard so that the system does not run out of money It is now a question of trying to shorten the period of risk aversion and credit shortage as it can exacerbate and prolong the downturn in the economy. As the Riksbank functions as the banks’ bank and supplies them with money which they then pass on to others in society, the Riksbank’s task is to supply money to the financial system. This reduces the risk of money shortages and sharply rising interest rates exacerbating the situation. By guaranteeing ample access to Swedish kronor that keeps down interest rates, the Riksbank helps to ensure that consumption and investment do not fall as much as they otherwise would have done. In this perspective, the Riksbank’s task is key in order to mitigate the effects on jobs and companies. And we take this task extremely seriously because “it is no game”, as one business leader put it in our survey.