functioning of the bond markets, and that the risk of moral hazard increased. for example, 70 per cent of respondents in the riksbank's financial market survey believe that the securities purchases have contributed negatively or very negatively to the functioning of the market. however, the costs of such negative side effects are hardly comparable to the value of avoiding a prolonged recession. the losses in the first purchasing phase are offset by gains for the state nevertheless, i would like to try to evaluate the narrower and more direct effects of our purchases of government bonds, purchases which were largely decided prior to the pandemic. in floden ( 2016 ) i tried to make such an evaluation of the initial purchases. 34 my calculations then indicated that the purchases of government bonds in phase 1 led to the government's costs for new borrowing via treasury bills and government bonds falling by approximately sek 7 billion in 20152017. the reason was that the rate on these securities was pushed down about 0. 3 percentage points below the policy rate. 34 kjellberg and ahl ( 2022 ) present this type of update, based on market prices in april 2022. their calculations indicate that the overall effects on government finances will be positive, despite the losses on the riksbank's balance sheet. in a similar assessment, the reserve bank of australia notes that while their purchases during the pandemic are now leading to substantial financial losses and probably a negative capital for the bank, the total value of purchases is nevertheless higher than the costs ( bullock, 2022 ). in a critical review of the us purchases during the pandemic, levin, lu and nelson ( 2022 ) believe that the programme was too large and extended, and they assess that the financial losses that are now incurred are not matched by other gains. 19 this effect on interest rates seems to be relevant even today ( see figure 2 ). the swedish national debt office's new borrowing in government bonds amounts to approximately sek 600 billion since 2015. if the rate on these bonds has become 0. 3 percentage points lower and the average maturity of the bonds is seven years, the cost of borrowing has decreased by sek 13 billion. in addition, the swedish national debt office has on average had a debt of approximately sek 80 billion in treasury bills. with a 0. 3 percentage point lower interest rate on this debt over eight years, a further sek 2 billion is added in reduced interest expenditure. 35 an updated calculation thus indicates that

to have pushed down the interest rate on government bonds to a certain limit. however, there are no signs that this caused households and companies to encounter lower interest rates. it is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel. 15 13 the market is dominated by so - called frn - bonds, where the coupon follows stibor 3 months. 14 erikson and vestin ( 2021 ) show a similar figure. some larger companies also finance themselves through the bond market. however, when the riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies'total borrowing ( see the riksbank, 2014 ). moreover, it is common for companies'bond loans to have variable interest rates. as turnover in the market is small, it is difficult to follow price developments. nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. however, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something i will return to in a moment. however, this was not the purpose of the riksbank's purchases. 7 figure 4. lending rates have followed the policy rate per cent note. the riksbank's policy rate and average lending rates from monetary financial institutions to households and companies, new agreements, all interest - fixation periods. sources : statistics sweden and the riksbank. unclear whether the riksbank's purchases contributed to the krona remaining weak one of the motives behind the riksbank's acquisition of assets was to avoid the krona strengthening in a situation where inflation was already too low. in that case, inflation would have been pushed down by lower import prices and the demand for swedish export products would have fallen. this would have brought down economic activity, which would have further dampened inflationary pressures. since other central banks also had large purchase programmes, the riksbank's intention was precisely to avoid the krona becoming too strong, not to weaken it. 16 it is hardly possible to say with precision how the riksbank's acquisition of assets affected the exchange rate. the analysis is complicated by, among other things, the fact that the riksbank published decisions on the asset purchases at the same time as decisions on the policy rate. 17 one indication that the purchases had the intended effect is that the krona did not strengthen but weakened,