The new financial environment has implications for payments, as well as monetary policy and financial stability. I therefore intend to discuss both how the financial environment has changed in recent decades, and how the Riksbank is dealing with the challenges that this entails. The payment market is currently undergoing a phase of major changes in Sweden and abroad. Digital methods of payment are becoming increasingly common, at the cost of cash, and new technology enables payment services to be offered increasingly by companies other than banks, such as FinTech companies. Digitalisation and increased competition make payments simpler and smoother, but also create new risks to which the Riksbank needs to react. For instance, we need to modernise the system we provide for interbank payments. We also need to supplement cash with “digital” cash – what we are calling the e-krona. However, I would like to emphasise that it is important that Swedes can continue to pay with physical cash. An increasingly rapid integration of the financial markets has led to financial capital being able to move rapidly and freely between countries and regions. Conducting an independent monetary policy thus becomes more difficult. The national financial markets policy has also had less room for manoeuvre; the more the financial markets integrate with one another, the more difficult it becomes for national financial market policy to maintain financial stability. Quite simply, in a world with well-integrated financial markets, more cooperation is needed at a supranational level.
When the pandemic broke out, the Riksbank already had a large portfolio of government bonds. We therefore primarily purchased mortgage bonds, whose risk premiums had risen rapidly at the start of the pandemic. This market is key to banks’ lending, as most of their mortgage loans to households are funded via mortgage bonds. The purchases reduced risk premiums, which supported credit granting in the economy. Risk premiums had also risen on corporate bonds. To reduce the risk premiums on corporate loans and support credit granting in general,  39 See Gertler and Karadi (2013). 40 See Elmér et al. (2012). 41 See Alsterlind et al. (2015). 42  See Melander (2021). 43 See also Sveriges Riksbank (2020b). 18 [35]  we therefore also purchased corporate bonds – although on a much smaller scale than the volume of mortgage bonds. A large balance sheet may be the new normal The Riksbank’s balance sheet is currently very large, and this is mainly due to the purchases of government bonds we began making in 2015, and to the measures taken during the pandemic. However, the balance sheet usually varies considerably over time. In a historical perspective – since the year 1800 – today's level is certainly the highest ever, but the balance sheet has been up at similar levels on several occasions, see Figure 10. The way the Riksbank has used the balance sheet over time thus varies a lot. The level does not stand out if one compares it with other central banks’ balance sheets, see Figure 11.