Riksbank streamlines bank liquidity planning with new measures
The Riksbank is implementing two new measures to facilitate banks' day-to-day liquidity management. This follows a decline in banking system liquidity as the central bank reduces its holdings of Swedish securities.
Boosting transparency on central bank reserves
The Riksbank is introducing two key changes to support banks' liquidity planning.
Firstly, it is increasing transparency regarding the resale of Riksbank certificates.
The time window for banks to sell certificates back to the Riksbank is shortened from between 09:00–15:30 to between 09:00–10:00. Information on any resales will now be published on the Riksbank's website at 10:15, providing market participants with faster and more accurate daily information on central bank reserves.
Secondly, the Riksbank will begin publishing data on the expected longer-term development of the aggregate liquidity surplus in the banking system.
This improved information flow aims to enable banks to plan their own liquidity management more effectively, adapting to the evolving liquidity landscape.
Adapting to a shrinking liquidity surplus
The banking system has recently experienced substantial liquidity in the form of deposits with the Riksbank.
This is now declining as the Riksbank reduces its holdings of Swedish securities.
This shift places greater demands on banks to actively engage in interbank borrowing and lending, particularly in the overnight market.
Such active participation is crucial for the effective implementation of the Riksbank's interest rate steering.
Banks must also be able to utilize the Riksbank's standing lending facilities without impediment.
These new measures are designed to help banks adjust their operational capacity and planning to this environment of a smaller liquidity surplus.
Proactive steps for market stability
These adjustments are a necessary response to the Riksbank's balance sheet reduction, ensuring market functionality as liquidity tightens.
While seemingly technical, the increased transparency and forward guidance are crucial for maintaining smooth interbank operations.
This proactive approach helps mitigate potential disruptions, supporting the overall stability of the financial system.