Swedish central bank lends $51bn to companies
Deal will help maintain credit supply to combat Covid-19 impact
Sweden’s central bank said it would lend up to SKR 500bn ($51bn) to domestic companies via banks to maintain the supply of credit during the coronavirus pandemic.
The Riksbank said the virus would “undoubtedly have clearly negative effects on economic activity”.
“To alleviate these consequences, it is essential that the credit supply to companies continues to function efficiently,” it said in a statement on Friday.
“The measures taken in this situation should be regarded as a form of insurance that enables Swedish companies, particularly small and medium-sized enterprises, to feel secure that the credit supply will not fail,” said bank governor Stefan Ingves.
The loans would be granted at a rate equivalent to the Riksbank’s repo rate, at present 0% with a maturity of 2 years. The central bank said it would regularly follow up on the banks’ lending to non-financial companies to ensure that the loans allocated to the banks were used to benefit the companies.
The Riksbank said it was prepared to take further measures and to supply necessary liquidity.
“Economic developments and the situation on the financial markets, both in Sweden and other countries, are now changing very rapidly. Given this, the Riksbank is ready and prepared to take further measures and to supply necessary liquidity, even between the ordinary monetary policy meetings,” it added.