Our own foreign exchange reserve was not sufficiently large to manage such extensive lending in dollars. The increased lending has meant that the Riksbank’s balance sheet grew during the second half of 2008 from around SEK 200 billion to around SEK 700 billion. We have also changed our collateral requirements so that the banks can offer more types of security as collateral and thus more easily sustain their functions in the market. We have given special liquidity assistance to Kaupthing and Carnegie to safeguard financial stability and ensure the functioning of the financial markets. We have begun offering loans with commercial paper as collateral to facilitate companies’ financing. We have also signed swap agreements with Iceland and Latvia to support crisis management in these countries. And we have cut the interest rate. Since the monetary policy meeting in February we have further extended these unconventional measures. We have decided on loans with longer maturities, with variable interest rates and with smaller supplements and we have signed a swap agreement with Estonia. The Swedish National Debt Office and Finansinspektionen (the Swedish financial supervisory authority) have also taken action to alleviate the financial crisis. The Government has raised the state deposit guarantee and extended it to cover all types of deposits in accounts, it has introduced a guarantee programme, established a guarantee fund and decided on means of capital injections to the banks. At the same time, the Government is conducting a more expansionary fiscal policy than before. I now intend to move on to describe international developments.
BIS Review 25/2009  5  Several companies state in the Riksbank’s company survey, which was carried out in December and January, that they have not experienced such a sudden slowdown in the economy as during the final months of 2008. The companies also say that they have found it increasingly difficult to finance their operations. But no clear credit crunch is yet visible in the official financial market statistics. Lending to companies increased by 0.3 per cent in January compared with the previous month and by 10.6 per cent compared with the same month last year. Our most recent forecast is that GDP will fall by 1.4 per cent this year. Towards the end of the year GDP is expected to begin to rise again. But as with international economic activity, there is a substantial risk that Swedish developments will also be poorer than in our main scenario. The GDP forecast for this year has been revised down substantially since last autumn. In September 2008 the Riksbank forecast growth this year of 0.9 per cent. It is very rare that forecasts are changed so much in such a short time. The revision is way outside the 95 per cent confidence interval that usually applies to our forecasts. It is also the reason why monetary policy has changed so radically since last autumn. The weakened economic activity is now also having an increasingly clear effect on the labour market. Employment has begun to fall and unemployment has begun to increase.