Finally, in the spring of 2009, we agreed to ask the Swedish National Debt Office to temporarily borrow a further SEK 100 billion in foreign currency, thereby reinforcing the foreign currency reserve to about SEK 300 billion. Including the agreements with the Fed and the ECB, the foreign currency reserve thus amounted to about SEK 600 billion in the autumn of 2009. Now it has decreased to about SEK 300 billion again and, according to an earlier decision, part of this is temporary.14 I was one of those who considered that the Riksbank’s own foreign currency reserve should be greater than SEK 300 billion, and this is an opinion that I still hold. My reason is that the Swedish banking system is still highly dependent on market funding in foreign currency. If the fiscal problems in Greece lead to the writing off of the Greek national debt, this may lead to renewed difficulties for the Swedish banks in obtaining funding in foreign currency. One alternative to retaining a good-sized currency reserve in the Riksbank would be for the banks to reduce their dependence on market funding in foreign currency. As I mentioned earlier, greater demands will be made on the banks’ liquidity through the Basel regulations. But they say nothing about requirements for preparedness regarding liquidity in foreign currency, something which is particularly important for us in Sweden. Imposing charges on  13  The agreement with the ECB is conditional to approval from the ECB in every single case.
All of the agents stand back and assume that someone else will do the work, which means that many of them use the same sources of information for strategies and investments. The theory that market prices are based on all available information is thus overthrown. Prices are based more on recommendations from rating agencies and other external analysts who thereby assume great responsibility. To some extent, it must be the case that for each individual agent to research the information would be too costly and time-consuming. However, it is important to make use of the market that is there, with different analysts. A large number of agents closely linked to one another can lead to the liquidity in the market becoming more important - in short, that there is someone there when you want to sell at a reasonable price. There are greater risks that liquidity problems will arise when there are more links in the chain and if all of the market agents risk running in the same direction. Then there may be several agents trying to sell the same asset at the same time. Although many market agents have become much better at managing risk, many models are based on historical data which provides little information on risks in new, untried products. If one of these very improbable events were to occur, it could lead to increased uncertainty and willingness to rapidly change holdings, which would perhaps be difficult if everyone else had become more cautious.