Major market unease in the wake of the coronavirus Anna Breman - - PowerPoint PPT Presentation

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Sep 01, 2022 369 likes •481 views

Major market unease in the wake of the coronavirus Anna Breman Deputy Governor of the Riksbank Riksdag Committee on Finance 10 March 2020 Increased unease on financial markets 90 90 VIX index 80 80 70 70 60 60 50 50 40 40 30 30

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Major market unease in the wake of the coronavirus

Riksdag Committee on Finance 10 March 2020

Anna Breman Deputy Governor of the Riksbank

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Increased unease on financial markets

10 20 30 40 50 60 70 80 90 10 20 30 40 50 60 70 80 90 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

VIX index

Implicit volatility S&P 500 Index Source: Bloomberg

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Falling stock exchanges

Source: Macrobond Index, 2016-01-02=100

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Increased demand for safe assets

Sources: National central banks, US Treasury and the Riksbank Per cent, 10-years government bond yields

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Swedish krona normally affected in uncertain times

Sources: National sources and the Riksbank

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Falling oil price

USD per barrel Source: Bloomberg

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Increased uncertainty hits companies with lower credit ratings

High credit rating Lower credit rating

Basis points Sources: Bloomberg and Barclays

SLIDE 8

The Riksbank’s toolbox is not exhausted

Loans to financial institutions to supply liquidity in a crisis

Emergency liquidity assistance

But the interest rate is close to its effective lower bound

Policy rate

Loans to companies via banks
Purchase government, municipal, housing and corporate

bonds

Foreign exchange interventions
Forward guidance

Other measures

SLIDE 9

Scope to broaden bond purchases

Outstanding volume of bonds issues in SEK billions Sources: SCB, Kommuninvest, Covered Bond Label and the Riksbank

500 1000 1500 2000 2500 3000 3500 4000 500 1000 1500 2000 2500 3000 3500 4000 2013 2014 2015 2016 2017 2018 2019

Housing bonds Government bonds Corporate bonds Municipal bonds