In summary: SWESTR should replace STIBOR – the Riksbank will play an active part in this work So to summarise, my message here today is this: The reference rates that have been dominant for several decades have clear flaws, and this is true both internationally and in our own Swedish financial market. Due to the Riksbank starting to provide SWESTR for the Swedish market, there is now a robust and reliable alternative to STIBOR. So there are good reasons to start the transition from STIBOR at its shortest maturity (STIBOR T/N) to SWESTR as soon as possible, in line with international developments. It is not work done from one day to the next, but it is a job worth doing. In the longer run, it should also be possible for SWESTR to replace STIBOR at longer maturities. The Riksbank will support this transition in various ways. Our goal is that the dominant reference rate in the Swedish financial market shall be of the highest international standard and that requires both support from us as authorities and a high level of ambition among the various market participants. Thank you for listening. I look forward to your questions and comments. 1  Tomorrow-next refers to a deposit from the next business day to the following business day. The Riksbank collects data both on short-term money market transactions in Swedish kronor and on other transactions that may form the basis of STIBOR. Transactions under ten million kronor do not have to be reported.
And from tomorrow, the Riksbank will also publish average rates based on SWESTR. Initially, we will provide average rates for one week and one month periods. Average rates for longer periods will begin to be published gradually, until 1 March next year. In addition, we will provide an index for SWESTR that makes it easier to calculate the average rate for a period between any two business days. Backward-looking reference rates can serve the same purpose as forward-looking ones The backward-looking average rates are structured differently to the current forward-looking interbank rates. The forward-looking rate is known at the beginning of the period, while the backward-looking interest rate cannot be calculated until the end of the period. And the forward-looking rate includes a larger risk premium element. 6 [8]  In spite of these differences, my view is that backward-looking average rates will in many situations still function as an adequate substitute for STIBOR’s longer maturities, because I believe that predictability and the larger risk premium are in many cases not essential properties for reference rate users. Why, for example, is STIBOR 3 months a normal reference rate when a municipality issues a bond at a maturity of 5 years with a "variable" interest rate? The amount of interest payments during the term of the loan is unknown regardless of whether the reference rate is backward- or forward-looking. If the municipality (and the creditors) had wanted predictable interest flows, a fixed interest rate would have worked better.