Martin Flodén: SWESTR – a fully transaction-based reference rate

Digital speech by Mr Martin Flodén, Deputy Governor of the Sveriges Riksbank, at the Kommuninvest Finance Forum, 30 September 2021.

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

Central bank speech  | 
21 October 2021

Accompanying slides:

I would like to thank Ola Medelberg for help in writing this speech, and Ingrid Wallin Johansson, Anders Rydén, Johannes Forss Sandahl and Marianne Sterner for valuable comments.

I would like to begin by thanking Kommuninvest for the opportunity to participate in its Finance Forum.

As usual, the Finance Forum offers a highly appreciated meeting place where representatives of both authorities and the private sector can have open and fruitful discussions on current financial market issues. Thank you to Kommuninvest for that!

As mentioned in Maria Viimne's presentation, I am going to talk today about the Riksbank's new reference rate SWESTR.

I will explain why the Riksbank considers that financial market participants in Sweden should now begin the transition from STIBOR, the traditional reference rate in Swedish kronor, to the Riksbank's transaction-based reference rate SWESTR. I will also describe how the Riksbank intends to be active in and support this process.

However, in order to provide some context, I will first briefly explain the importance of reference rates in the financial market. I will also provide some background to the interbank rates, such as STIBOR and LIBOR, which have been dominant in the markets to date, and describe the problems with these reference rates.