Cecilia Skingsley: The central bank in an innovative and fast-paced world

Speech by Ms Cecilia Skingsley, Deputy Governor of the Sveriges Riksbank, at the SEB Bankers' Day, Stockholm, 31 May 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The central bank in an innovative and fast-paced world

On 22 July 1668, a Stockholm court sentenced a bank director to death. The bank director's name was Johan Palmstruch, and he was the founder of the first bank in Sweden, Stockholms Banco. A few years earlier, Stockholms Banco had suffered an acute liquidity shortage when a confidence crisis arose regarding the banknotes issued by the bank. When the bank was unable to pay its depositors, it was simply taken over by the then Riksdag of the Estates, and later became the precursor to Sveriges Riksbank. Palmstruch was thus condemned to death unless he reimbursed the bank's creditors, which he of course was unable to do. The Council of the Realm eventually converted the death sentence into a prison sentence. And later, after the Chancellor Magnus Gabriel De la Gardie rushed to the defence of the deposed banker, Palmstruch was finally granted a pardon. De la Gardie also happened to be one of the bank's largest borrowers. It was possibly the Chancellor's guilty conscience that made him advocate milder treatment of Palmstruch. Not long after he was released, more precisely on 8 March 1671, Palmstruch died of natural causes.