Erik Thedéen: The banks need to have more active liquidity management
Speech by Mr Erik Thedéen, Governor of the Sveriges Riksbank, at a meeting with monetary policy counterparties, hosted by the Sveriges Riksbank, Stockholm, 11 September 2025.
The views expressed in this speech are those of the speaker and not the view of the BIS.
Presentation accompanying the speech
Welcome to the Riksbank!
Today I am going to talk about the challenges faced by the Riksbank and other central banks in designing their operational frameworks when normalising their balance sheets (see Figure 1) and how this affects the Swedish banks. For several years, the amount of central bank liquidity in several countries has been at or near record levels, due to monetary policy-driven asset purchases. But that is now changing.
My message here today is that our monetary policy counterparties, the banks, need to prepare for the fact that there will soon be substantially less central bank liquidity in the Swedish banking system. They need to adapt to managing their liquidity in the market. This makes greater demands of the individual bank to have both operational capacity and a willingness to lend and borrow on the overnight market. At the same time, the banks should always be able to use the Riksbank's lending facilities without hesitation when needed. They not only can, but should, use them when the money market is for some reason struggling to reach equilibrium and overnight rates are moving erratically. The Riksbank's lending facilities are there to be used and are the basis for stable interest rate formation.