Sveriges Riksbank, or the Riksbank as it is usually called, is the world’s oldest central bank. The Riksbank has a 350 year old history.
Image sources for the timeline below: Dagens Nyheter, Margaret Thatcher Foundation, Royal Coin Cabinet, Nationalmuseum, Stockholm City Museum, Shutterstock, Sveriges Television, Tumba Papermill Museum, UN/DPI/TT and Wikipedia.
To remedy the lack of coins, Chancellor Axel Oxenstierna proposes setting up a bank in every town. This would make money circulate more quickly and stimulate trade.
Axel OxenstiernaThe first copper coins are minted when Sweden introduces the copper standard in 1624. The reasons for this are the shortage of silver and gold due to the prolonged wars, and a desire to maintain the price of copper, which was Sweden's most important export product.
Copper standard is introduced
During the 1630s and 1640s, production in the Falu copper mine increased substantially and to keep up the price of copper it was decided to begin manufacturing large plate coins made of copper. The biggest one weighs 19.7 kg and is the largest coin in the world.
The world's largest coin
Johan Palmstruch starts Sweden’s first bank, Stockholms Banco. Charles X Gustav emphasises the bank's importance in safeguarding the value of money.
Sweden’s first bank
Stockholms Banco issues the first real banknotes in Europe. They are a great success, but it all ends in a bank failure.
First banknotes in Europe
Riksens Ständers Bank, today Sveriges Riksbank, is founded from the ruins of Stockholms Banco. The world's oldest central bank is born. It moves into Axel Oxenstierna's palace in the old town of Stockholm.
Sveriges Riksbank is founded
The Bank of the Estates of the Realm (Sveriges Riksbank) moves into Södra Bankohuset at Järntorget in the old town of Stockholm. The building, which still stands, is designed by Nicodemus Tessin the Elder.
First building of its own
Charles XI introduces absolute monarchy and decides that the royal powers will have the last word on all matters. This also applies to the Bank of the Estates of the Realm (Sveriges Riksbank).
Absolute monarchy takes power over the bank
The predecessor of our modern money. When a transaction is concluded, the bill is signed over, or transported, to its new owner.
Transport bills are introduced
While the war is going well, many people deposit money in the Bank of the Estates of the Realm (Sveriges Riksbank). But when they attempt to withdraw it, following the defeat at Poltava, there is no money to be had. The Bank simply freezes its depositors’ accounts.
Military defeat leads to banking crisis
During the reign of Charles XII, wars cost a lot of money. To fund them, more than 40 million emergency coins are issued. The round copper coins have different inscriptions such as “Jupiter”, “Mars” and “Flink och färdig” (quick and ready).
Emergency coins fund the warWhen the Hats took power, it was the end for the cautious economic policy that had long been pursued. The new policy caused inflation to soar.
New policy creates inflation
The Riksbank wishes to put an end to counterfeit banknotes. One way is to manufacture paper that is difficult to copy. So the bank starts its own paper mill at Tumba.
Tumba Bruk is founded
Susanna Ekström and Ingeborg Jönsdotter, two female banknote counterfeiters, are sentenced to death for counterfeiting and passing banknotes.
Counterfeiters sentenced to deathThe Caps take over power from the Hats and assign the board of governors the task of restoring the value of money to what it had been 30 years ago. This leads to a severe deflation crisis.
The Caps create deflation
In Fredman’s epistle no. 24, the poet Carl Michael Bellman hails deflation as it is making aquavit cheaper. Times are bad! People are sad - but with a lower nicker comes cheaper liquor…
Cheaper spirits
In the 18th century, there are many different coins and counterfeits are common. Consequently, Johan Liljencrantz, Minister of Finance under Gustav III, carries out a coin reform so that only one coin, the riksdaler, is left. At the same time, the value of money was stabilised.
Many types of coin become one
The Swedish National Debt Office is created to manage sovereign debt and fund the war with Russia. The Swedish National Debt Office issues bonds against interest, which rapidly start to be used as banknotes.
The Swedish National Debt Office is established
Gustav III is murdered by a borrower who has made large losses due to the king’s manipulation of the value of money.
Anckarström shoots the king
To facilitate the handling of cash and loans, the Riksbank opens regional offices in Göteborg and then, just afterwards, in Malmö.
The first local office opens
Swedish commercial banks start to emerge again, with the first being Skånska Privatbanken in Ystad. The bank had the right to issue banknotes, subject to certain terms. Thirty other banks followed due.
Private banks issue their own banknotes
Many previous attempts had been made to stabilise the value of money by making it possible to redeem banknotes for silver. This does not succeed until the reign of Charles XIV Johan.
The silver standard is reintroduced
Sweden gets its first banknotes with a modern appearance. They have a horizontal format, are printed on coloured paper and are adorned with figures and other embellishments.
The first modern banknotesThe decimal system is introduced for coins and we get one coin system instead of two parallel ones. Instead of riksdaler banco and riksdaler riksgälds, we get riksdaler riksmynt, which are divided into 100 öre.
We start using decimals
When the Riksdag of the Estates is abolished in 1866, the Riksbank can no longer be called the Bank of the Estates of the Realm. Its new name is Sveriges Riksbank.
The Riksbank is renamed
When the gold standard is introduced, the new unit of coinage is named the krona.
Sweden gets the krona
Banking firm Barings Brothers triggers an international financial crisis after failed speculations. For the first time, the Riksbank uses the policy rate of the time, the discount rate, to cool down the strong demand for foreign currency.
The discount rate is used for the first time
Langenskiöld participates in the work of giving the Riksbank a monopoly on issuing banknotes, 1897. He is widely acclaimed, contributing towards his appointment as Governor of the Riksbank.
Karl Langenskiöld becomes Governor of the Riksbank
Until 1904, the commercial banks have had the right to issue banknotes. Now the Riksbank gains the sole right.
Sole right to issue banknotes
The Riksbank moves from Järntorget to the new premises in what would later become the Riksdag building.
A financial crisis breaks out in the United States. It rapidly spreads to Europe and Sweden. For the first time, the Riksbank acts as a modern central bank and manages the crisis.
Financial crisis managed
After the outbreak of the First World War, most countries leave the gold standard. Exchange rates float against each other and inflation increases heavily. As the discount rate is not raised at the same rate as inflation, the speculation economy is encouraged. This pushes up inflation.
The gold standard collapsesThe end of the war means that the strong demand for Swedish products abroad collapses with devastating deflation and an economic crisis as consequence.
Strong deflation after the war
On 24 October 1929, the stock exchange on Wall Street in New York crashes. This event marks the end of the Roaring Twenties and is the start of a worldwide depression. The Riksbank is led by Ivar Rooth.
Stock market crash on Wall StreetAfter speculation against the krona, Sweden abandons the gold standard. The exchange rate becomes variable but, to protect domestic purchasing power, the Riksbank becomes the first central bank in the world to have a price stability target as a standard for monetary policy.
First in the world with price stability target
Ivar Kreuger’s enormous financial empire collapses in the wake of the Wall Street Crash. Despite enormous credits from Swedish banks and the Riksbank, he is unable to get his affairs in order and commits suicide in Paris.
The Kreuger Crash
A few days before the outbreak of the Second World War, Sweden pegs the krona to the dollar instead of sterling.
The krona is pegged to the dollar
Dag Hammarskjöld has great influence over the coordination of fiscal and monetary policy, both as state secretary at the Ministry of Finance and as Chairman of the Riksbank's General Council. Later, he becomes the UN’s first and, so far, only Swedish Secretary-General.
Important role for HammarskjöldCompared with the First World War, the economic policy conducted in the Second World War is successful. The Government's policy was focused on keeping interest rates down. The Riksbank’s independence is restricted.
Monetary policy subordinated
Sweden joins the International Monetary Fund and World Bank. New regulations lead the Riksbank to govern the commercial banks with an iron fist.
International commitments and increased regulation
When Per Åsbrink takes up his position, Sweden is conducting a low interest rate policy. This changes when he pushes through the ‘interest rate coup’ of 1957. Under Åsbrink, a jubilee foundation is set up in the bank's name, alongside the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
Per Åsbrink becomes GovernorWithout informing the Government in advance, the Riksbank raises the repo rate by an entire percentage point, from 4 to 5 per cent. The decision leads to heated political debate but marks the end of the low interest rate policy.
The interest rate coup
The Riksbank celebrates its 300th anniversary and makes a donation to the Nobel Foundation. The donation is used for an annual prize in economic sciences in memory of Alfred Nobel.
The Riksbank celebrates its 300th jubilee and the Prize in Economic Sciences in Memory of Alfred Nobel is established
It takes six years for the building, designed by architect Peter Celsing, to be finished. On 8 April 1976, it is time to move into the black granite building at Brunkebergstorg in Stockholm.
Construction starts on the Riksbank building
1973 is an eventful year. The post-war international currency cooperation Bretton Woods goes into the grave and Sweden joins the currency snake, the monetary cooperation of the European Community (EC).
Bretton Woods goes to the graveIn Europe, governments try to set up new exchange rate agreements with each other. Sweden participates in these attempts but, under the pressure of deteriorated competitiveness, the krona is devalued repeatedly from 1976 on.
Wave of devaluations starts
Wohlin steps in with a strong influence over economic policy. He is met with challenges in the form of the wave of devaluations prevailing in his tenure.
Lars Wohlin becomes Governor of the Riksbank.
Under Bengt Dennis, the marginal rate is raised to 500 per cent for a couple of days in 1992. The fixed exchange rate is replaced by a floating one. Dennis also manages a financial and banking crisis and introduces the Riksbank’s inflation target.
Bengt Dennis becomes Governor of the Riksbank
The internationalisation of the financial market leads increasing numbers of countries to soften up their financial market regulation in the 1970s and 1980s. Sweden resists long, but starts to dismantle regulation in 1985.
The November RevolutionOn 17 May 1991, the Riksbank decides to peg the krona to the European Currency Unit (ECU). This link is unilateral. There is no agreement with the EC countries and no obligation to maintain a particular exchange rate. To begin with, the ECU link appears to provide increased confidence in the Swedish krona, but this proves temporary.
The krona is pegged to the ECU
In autumn 1992, the Riksbank raises the interest rate to 500 per cent to defend the krona. This defence fails and the krona exchange rate is floated.
Interest rate 500% – the krona floats
With a floating exchange rate, price stability becomes the overall target for monetary policy. The Riksbank specifies the target at 2 per cent inflation with a tolerance band of +/- 1 percentage point.
The Riksbank sets an inflation target
By the time Urban Bäckström becomes Governor of the Riksbank, the financial system has started to recover from the financial crisis. The Riksbank becomes formally independent. Sweden joins the EU and preparations for the possibility of joining the monetary union start.
Urban Bäckström becomes Governor of the Riksbank
After the referendum on EU membership, Sweden signs the Maastricht Treaty. One important part of the treaty is that states will commit to giving their central banks an independent status. The central banks shall stand above political influence and central government will not be permitted to borrow from them.
Sweden signs the Maastricht Treaty
The Sveriges Riksbank Act is changed to give the Riksbank a more independent role. The bank’s task of maintaining price stability is also confirmed by law. Moreover, the Riksbank shall promote a safe and efficient payment system.
New law gives the Riksbank more independence
Heikensten has eight years’ experience of the role of Deputy Governor before he becomes Governor of the Riksbank. During his tenure, he manages interest rate cuts and Sweden’s referendum on the EMU.
Lars Heikensten becomes Governor of the Riksbank
Ingves is Governor when the Executive Board takes the historic decision to cut the repo rate to zero in 2014 and then to introduce a negative interest rate in 2015.
Stefan Ingves becomes Governor of the Riksbank
When the US investment bank Lehman Brothers fails, it leads to a global financial crisis, the worst since the depression of the 1930s. Sweden manages relatively well.
Global financial crisis
The last Swedish öre coin, the 50-öre, ceases to be valid. This means that
the 1-krona is the lowest coin denomination, but the öre remains as an arithmetical unit.
In October 2014, the Riksbank cuts the repo rate to 0 per cent. Its aim is to increase demand in the economy and bring inflation up. This is a historic event; never in the Riksbank’s almost 350-year history has the interest rate been so low.
Repo rate cut to 0 per cent
Susanne Eberstein becomes the first female Chairperson of the General Council of the Riksbank.
Eberstein takes the gavelThe increasingly low rate of inflation leads to a series of repo rate cuts. In February 2015, the repo rate becomes negative for the first time. The Riksbank also starts to purchase government bonds to lower interest rates in general across the economy.
Negative repo rate is introduced
In 2015 and 2016, Sweden gets a new, modern banknote and coin series. A new denomination, the 200-krona banknote, is also introduced. The Riksbank also starts to issue the 2-krona coin again. The banknotes have new security features and the coins are smaller, lighter and nickel-free.
New banknotes and coins
The Executive Board of the Riksbank decides to change the target variable for monetary policy.
The CPIF as target variable for monetary policy
Sveriges Riksbank reaches the age of 350. We are marking this with a number of activities. In this way, we wish to disseminate knowledge about the Riksbank's role in the Swedish economy and about important future issues.
Sveriges Riksbank reaches the age of 350
The use of banknotes and coins is declining in society. The Riksbank decides to develop a proposal for a technical solution for Swedish kronor in electronic form, known as an “e-krona”.
E-krona
The Riksbank is taking a large number of measures to alleviate the economic effects of the coronavirus pandemic and support the Swedish economy.
The Riksbank’s measures during the coronavirus pandemic
The Riksbank starts publishing SWESTR (Swedish krona Short Term Rate) – a transaction-based reference rate.
Publication of SWESTR starts
The Riksdag decides to adopt a new Sveriges Riksbank Act that enters into force on 1 January 2023.
Decision on a new Sveriges Riksbank Act
Erik Thedéen takes over as Governor of the Riksbank from 1 January 2023.
Erik Thedéen becomes Governor of the Riksbank