Sweden’s Riksbank Most Likely Needs Legal Approval Before Buying Corporate Bonds

Posted on 05/03/2020

Sweden’s central bank, Riksbank, purchased 5.6 billion SEK of corporate commercial paper as part of an emergency quantitative easing (QE) plan to deal with the fallout of the Wuhan coronavirus pandemic. However, the central bank does not have the legal right to purchase bonds issued by companies. The current form of the Riksbank Act does not permit the central bank to make outright purchases of corporate bonds or other private securities on the primary or secondary markets.

The Riksbank is considering including high-grade corporate bonds to a record US$ 30 billion QE program to stave off a credit crunch in Sweden. The central bank is keen on using its balance sheet to make sure the financial sector is working.

Keywords: Sveriges Riksbank.

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