For instance, the Riksbank monitors and analyses the financial system, identifies potential risks and influences participants that are important to financial stability. We shall work to prevent financial crises from arising, but if they should nevertheless arise, it is our task to manage the situation. What does this mean? For instance, we must be prepared to act in situations where our assessment is that financial stability is threatened. Let us assume, for example, that a Swedish bank which is under the supervision of Finansinspektionen, the Swedish Financial Supervisory Authority, is solvent and has assets that are greater than its liabilities, but experiences serious problems with its liquidity and thereby difficulty in meeting its payments. If the Riksbank’s assessment in such a situation is that the stability of the financial system is at stake if the bank collapses, then we can intervene with measures to aid liquidity. The United States is currently in the midst of a financial crisis, the backwash of which is sweeping through the global financial system. Although financial turbulence has been included in our analyses ever since last summer, the way it has manifested itself and the intensity of the events has varied along the way. And in recent weeks the problems have escalated. The most recent wave of financial turbulence is the worst so far since the original US mortgage crisis broke out. So what has happened recently? For one thing, large agents in the US financial market have suffered acute problems.
This means that the credit granter is more protected than in the case of ordinary bonds. Covered bonds are therefore good collateral and many other central banks accept these bonds on a larger scale than the Riksbank. In our case the permitted share was raised from 25 per cent to 75 per cent. This measure means, put in very simple terms, that participants in the RIX system can use more collateral to borrow against if necessary. Another measure is that, for instance, the Riksbank and the central banks of Denmark and Norway, together with the US Federal Reserve, have reached an agreement for the purpose of increasing access to dollars in the Scandinavian financial markets, if necessary. For the Riksbank this involves the possibility to obtain access to US dollars in addition to the foreign currency reserve. This is what is known as a swap facility and amounts to a total sum corresponding to USD 10 billion. Our assessment is that it will probably not be necessary to use the money. It is nevertheless important to demonstrate that we are prepared to act if it should prove necessary. The agreement can be quickly put into operation if it should actually become necessary. Financial stability is satisfactory What is happening now has not come as a bolt from the blue. And it is not a question of the central banks sitting with their arms folded ignoring the risks taken by the commercial banks.