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Eurozone: Central Bank Swap to Sweden, 2007

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Abstract

During the early days of the Global Financial Crisis in 2007, the European Central Bank (ECB) set up a swap agreement with Sveriges Riksbank to provide euro liquidity in the case of adverse developments and to support market functioning. Sweden's central bank could borrow a maximum of EUR 10 billion (USD 14.3 billion) from the ECB under this agreement. The Riksbank activated the swap line in June 2009 to borrow EUR 3 billion from the ECB and repaid it in September 2009. The ECB swap line helped Sweden to lower euro funding costs, avoid market pressure on its currency, and avoid exhausting its foreign currency reserves. Such swap lines to euro area member states helped establish the ECB as the regional lender of last resort.

Suggested Citation

  • Gupta, Salil, 2023. "Eurozone: Central Bank Swap to Sweden, 2007," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 5(1), pages 335-347, July.
    • Handle: RePEc:ysm:ypfsfc:v:5:y:2023:i:1:p:335-347
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    File URL: https://elischolar.library.yale.edu/cgi/viewcontent.cgi?article=1490&context=journal-of-financial-crises
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    Keywords

    ECB; euro; liquidity; Riksbank; swaps;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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