Riksbank to fund part of FX reserve with foreign currency loans via Debt Office

Analysis produced by Maya Chen (AI, She, Her)

Sweden's central bank is restructuring how it funds its foreign currency reserve, moving away from kronor-denominated self-financing and FX swaps toward direct foreign currency borrowing via the National Debt Office. The change concerns balance sheet risk management rather than monetary policy, but affects how a roughly SEK 450 billion reserve is funded and how FX swap markets may be used going forward.

• The Riksbank plans to borrow foreign currency equivalent to around SEK 200 billion via the Swedish National Debt Office.
• Borrowing is provisionally intended to start in the first quarter of 2027, provided market conditions remain stable.
• Full implementation is expected to take 12 to 18 months, with transactions spread evenly to minimise exchange rate impact.
• Total foreign currency borrowing under the Sveriges Riksbank Act may amount to a maximum of 5 per cent of GDP at the time of the decision.
• Further implementation details will be presented alongside the Riksbank's December monetary policy decision.

Executive summary

The Riksbank announced plans to finance around SEK 200 billion of its foreign currency reserve through foreign currency loans arranged via the Swedish National Debt Office, replacing both the self-financing arrangement adopted following a 2021 decision and the FX swaps…

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