Why the Riksbank receives SEK 25 billion in capital injections

The current Sveriges Riksbank Act entered into force on 1 January 2023. The Act establishes, among other things, a target level, a base level and a minimum level for the amount of equity that the Riksbank shall have. The law states that if equity falls below the established minimum level, the Riksbank must go to the Riksdag and request a capital injection to restore equity to at least the basic level.

This is what the Riksbank did in the submission for a capital injection of SEK 43.7 billion that was submitted to the Riksdag at the beginning of April 2024. On the basis of this submission, the Riksdag then decides how much capital to inject to the Riksbank.

The Riksbank’s equity has fallen below the minimum level above all due to the loss reported by the Riksbank in 2022. The loss was due to a sharp rise in interest rates both in Sweden and abroad that year, which in turn was due to inflation rising very rapidly. The higher interest rates meant that the market value of the Riksbank’s bonds in Swedish kronor and foreign currency decreased to a level below the acquisition value.

The accounting principle followed by the Riksbank means that this was recorded as, so-called, unrealised losses. In other words, although the bonds were not sold, the reduced market value was counted as losses , which led to the Riksbank's equity decreasing and becoming negative.

“A negative equity does not affect the Riksbank’s ability to conduct monetary policy in the short term. But to maintain confidence in an independent monetary policy in the long term, it is necessary that the Riksbank is financially independent, that is, has sufficient equity and earnings to cover its costs,” says Governor Erik Thedéen.

The Riksdag decided to allocate a capital injection of SEK 25 billion to the Riksbank. In connection with the decision on the capital injection, the Riksdag stated that it is important that the Riksbank is adequately self-financed. The Ministry of Finance has now sent out a consultation memorandum with proposals to strengthen the Riksbank's possibilities for self-financing.

The consultation on the memorandum "New conditions for the Riksbank's funding" was sent out at the end of June and on 18 September 2024 and the Riksbank submitted its consultation response.

In September 2024, the Government decided on the payment of the capital injection, which has now been paid out. The payment means that our equity, before the results for 2024 has been taken into account, amounts to SEK 23 billion.