Since the number of transactions in Swedish kronor between panel banks has decreased, the STIBOR framework states that the banks' submissions can be based on judgements of their borrowing costs in foreign currency. The Riksbank considers this unfortunate and that a reference rate in Swedish kronor should be anchored in transactions in Swedish kronor only. The definition of SWESTR is similar to those in euro, British pounds and Danish kronor. Like the ECB, the Bank of England and Nationalbanken in Denmark, the Riksbank has chosen to use deposit transactions with overnight maturity, and with a counterparty group that is wider than just the panel banks. The main reason is that this part of the money market tends to exhibit good and relatively stable transaction volumes, even in difficult times. The transition to SWESTR should begin now – it is a process that will take several years and some adjustments are required As SWESTR is now available, there is an alternative to STIBOR. We therefore call on market participants to step up their efforts for a transition to SWESTR. 5 [8]  However, in order for us to reach a point where transaction-based reference rates dominate in the market in Sweden and internationally, certain adjustments are required in the financial markets. This process needs to run over several years. The greatest need for adjustment probably concerns maturities. The traditional interbank rates are available at several different maturities, for example three and six months. However, SWESTR and its international equivalents are only calculated at the shortest maturity, overnight.

Unless there is a substantial nominal depreciation, the current high value of the Swiss franc will therefore continue. Growth in the M1, M2 and M3 monetary aggregates has been perceptibly weaker since summer; this is primarily attributable to the rise in long-term interest rates. Liquidity held by households and companies has nevertheless remained high. In the past, a sustained high level of liquidity generally pointed to inflation risks. As a result of the financial crisis, however, this correlation cannot currently be made. Thus, in recent years, the inflation rate has remained exceptionally low despite a high level of liquidity. At present, there are no signs of a rise in inflation in Switzerland. Our inflation forecast shows no risk of inflation whatsoever. In addition, surveys on inflation expectations reveal values that are consistent with our definition of price stability. This applies not only to short-term inflation expectations, but also to long-term horizons of up to ten years. Furthermore, production capacity in Switzerland is still underutilised, which also makes a rapid rise in inflation unlikely. SNB monetary policy In conclusion, I would like to look at the SNB’s monetary policy. Overall economic conditions have hardly changed since summer. Consequently, monetary policy remains a challenge for the SNB. Up to now, our economy has performed relatively well, considering the difficult international environment. And we have not had to enforce the minimum exchange rate with foreign currency purchases since September 2012. Financial markets expect short-term interest rates to stay very low worldwide for some time to come.