Since the number of transactions in Swedish kronor between panel banks has decreased, the STIBOR framework states that the banks' submissions can be based on judgements of their borrowing costs in foreign currency. The Riksbank considers this unfortunate and that a reference rate in Swedish kronor should be anchored in transactions in Swedish kronor only. The definition of SWESTR is similar to those in euro, British pounds and Danish kronor. Like the ECB, the Bank of England and Nationalbanken in Denmark, the Riksbank has chosen to use deposit transactions with overnight maturity, and with a counterparty group that is wider than just the panel banks. The main reason is that this part of the money market tends to exhibit good and relatively stable transaction volumes, even in difficult times. The transition to SWESTR should begin now – it is a process that will take several years and some adjustments are required As SWESTR is now available, there is an alternative to STIBOR. We therefore call on market participants to step up their efforts for a transition to SWESTR. 5 [8]  However, in order for us to reach a point where transaction-based reference rates dominate in the market in Sweden and internationally, certain adjustments are required in the financial markets. This process needs to run over several years. The greatest need for adjustment probably concerns maturities. The traditional interbank rates are available at several different maturities, for example three and six months. However, SWESTR and its international equivalents are only calculated at the shortest maturity, overnight.
It is therefore positive that various sector forums have begun to discuss issues related to SWESTR. The Riksbank will continue to support the transition. We will have an ongoing dialogue with the market and will also shortly be sending out a survey to gather the views of different participants on issues related to the transition. However, it is important to emphasise that the role of the Riksbank is limited to, through SWESTR, providing the conditions for a new form of reference rate and contributing to analysis. It is the market participants who are responsible for the transition taking place. They will therefore have to drive forward the issue of a transition in order to ensure that a reference rate with a high degree of confidence also dominates in the Swedish financial market. 7 [8]  Of course, the Riksbank expects financial market intermediaries to take a great deal of responsibility in this process, but you too – who are to a large extent the end-customers of such participants – have a very important role to play. If you show your interest, it will facilitate a transition to a more transparent reference rate. Ask your bank contacts how they plan to introduce SWESTR into their operations. Request loans and other products that use SWESTR as an interest rate. Once the products are in place, start using them and thus help to create liquidity in the market.