In this case we were able to do this through our swap agreement with the Federal Reserve. One of the lessons of the crisis as far as the Riksbank is concerned is that our currency reserve must be large enough to meet the foreign currency needs of the Swedish banks in a crisis situation. One alternative that may be considered in order to dampen this need is for the Riksbank to introduce a reserve requirement in currencies other than kronor if the banks have substantial exposures in foreign currencies. This reserve requirement could in principle entail the banks building up a liquidity buffer in foreign currency via the Riksbank. We are at present studying the possibility of using reserve requirements in more detail. The central banks should not need to provide liquidity in the way they have done over the last two years. It is therefore reasonable to also tighten up the requirements governing the banks’ liquidity management. The Basel Committee is now working on a global standard for liquidity management. Under this standard, both short-term and long-term requirements will be imposed on the banks. The banks will be required, for example, to hold sufficient nonleveraged and highly-liquid capital to be able to meet the short-term need for liquidity in a stress situation. The long-term requirement relates more to structural aspects with the aim of preventing the risks that market funding and sizeable differences in maturities can lead to. This is a question of quantitative requirements for liquidity matching between the banks’ funding and assets.

In other words, the result is a secure credit supply and expansionary monetary policy. Figure 1. Yields on 5-year bonds Per cent  Sources: Macrobond and the Riksbank  1  Read about all the measures the Riksbank has taken on our website. Information on the measures is updated weekly. See https://www.riksbank.se/en-gb/press-and-published/updates-on-the-riksbank-and-the-coronaviruspandemic/the-riksbanks-measures-in-connection-with-the-corona-pandemic/. 2 [6]  Figure 1 shows the development in yields on different types of bond on the Swedish market. The economic crisis initially meant that bond yields rose. This was not a desirable development. But they have recently begun to fall back. To me, it is obvious that the Riksbank’s expansionary monetary policy measures have pushed down market rates. And if necessary, the Riksbank will do more. Inflation statistics difficult to interpret Under normal circumstances, monetary policy can be based on the analysis of a long line of economic quantities. As monetary policy is conducted with an inflation target, the statistics on inflation outcomes become particularly important. During the economic crisis an obvious problem with inflation statistics has been that there are no prices for the goods and services that cannot be consumed at present. This of course creates problems when calculating the consumer price index (CPI). Statistic Sweden (SCB) have clearly described their methods.2 For products that have no prices, they use the price development on similar products that do have prices. For products that do not have “similar” products, such as various types of foreign air travel, the annual percentage change in total CPI is used.