Negative interest

rates in advanced
economies
ADB institute Tokyo
1-2 december 2016 Cecilia Skingsley
Deputy Governor
of the Riksbank

The views expressed in this presentation are the views of the author and do not
necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI),
the Asian Development Bank (ADB), its Board of Directors, or the governments they
represent. ADBI does not guarantee the accuracy of the data included in this paper and
accepts no responsibility for any consequences of their use. Terminology used may not
necessarily be consistent with ADB official terms.
This is what I intend to talk about today
Negative policy rate and QE in Sweden since February 2015
Analytical framework of ELB
Passthru in rates, currency and credit
Results and the way forward
 Swedish monetary policy :
Repo rate path and QE

300 300

250 250

200 200

150 150

100 100

50 50

0 0
February March April July October April
2015 2016
Policy meeting

Per cent and SEK billion. The uncertainty bands for the repo rate are based on the Riksbanks historical forecasting errors and the ability of risk-premium adjusted
forward rates to forecast the future repo rate for the period 1999 up to the point when the Riksbank started to publish forecasts for the repo rate during 2007. The
uncertainty bands do not take into account the fact that there may be a lower bound for the repo rate. Outcomes are daily rat es and forecasts refer to quarterly
averages. Source: The Riksbank
3
Transmission analysis: analysing ELB
Market rates, lending and deposit rates

Per cent. Sources: Macrobond, Statistics Sweden and the

Riksbank
FX tradeweighted, outcome and forecasts

Index, 18 November 1992 = 100. Outcomes are daily rates and forecasts Sources: National sources and the Riksbank
refer to quarterly averages. KIX refers to an aggregate of countries that are
important for Sweden's international transactions.
Lending to households and companies

Annual percentage change. MFIs' lending to households and non-financial Source: Statistics Sweden
companies according to financial market statistics adjusted for
reclassifications and traded loans since 2006.
Return on Equity: Swedish and european
banks
16 16

12 12

8 8

4 4

0 0
European banks

The major Swedish banks

-4 -4
09 10 11 12 13 14 15 16
Per cent. Unweighted average. The red line represents a sample of European banks. The peer group consists of BBVA, Banco Kllor: SNL Financial och Riksbanken
Santander, Barclays, BNP Paribas, Commerzbank, Crdit Agricole, Credit Suisse, Danske Bank, DNB, Erste Bank, BPCE, HSBC, Intesa
Sanpaolo, KBC, Lloyds, Raiffeisen, RBS, Socit Gnrale, UBS and UniCredit. Each observation from the peer group consists of an
average where the single highest and single lowest observation have been excluded.
Result: Inflation and inflation expectations

3 3 2,4 2,4
CPIF excluding energy 5 years ahead
CPIF

2 2 2,2 2,2

1 1 2,0 2,0

0 0 1,8 1,8

-1 -1 1,6 1,6
10 11 12 13 14 15 16 10 11 12 13 14 15 16

Annual percentage change. The CPIF is the CPI with a Sources: Statistics Sweden and TNS Sifo Prospera
fixed mortgage rate. Inflation expectations according to
money market participants.