The Swedish Parliament decided in 1997 that Sweden would not participate in the monetary union from its inception in 1999. The Swedish referendum on the euro in September 2003 confirmed this decision, and Sweden will thus remain outside the monetary union for the time being. The Riksbank has therefore retained responsibility for a monetary policy that is aimed at achieving price stability in Sweden.
Nevertheless the EU legislation regarding central bank independence and supervision of economic policy in the member states applies also to the countries that have not introduced the euro as their currency. However, unlike the euro area countries, the countries that have not adopted the euro cannot be sanctioned for not complying with the ECOFIN Council’s budget policy recommendations.
As long as Sweden remains outside the monetary union the Riksbank's participation in the European System of Central Banks (ESCB) involves mainly general cooperation to enable it to follow developments in the monetary union. The ECB for its part is responsible for monitoring Sweden’s and the other non-euro area countries’ eligibility for entering the monetary union in the future. To this end the ECB monitors regularly economic developments in general and the above-mentioned convergence criteria in particular in the countries outside the monetary union. The ECB also assesses legislative developments and must be consulted by all countries that are planning amendments to legislation, whether in the monetary or fiscal area. Every second year the ECB – like the European Commission – draws up a convergence report that contains an account of developments in these respects in the countries outside the monetary union. These reports do not usually cover Denmark and the UK, although these countries will also be examined if they wish to join the monetary union.
In the latest assessments of how Sweden fulfils the criteria for introducing the single currency, the krona’s exchange rate with the euro has not been judged to be stable enough. Neither is it foreseen in Swedish legislation that the ECB shall have any decision-making powers regarding the monetary policy conducted in Sweden as long as the Riksbank has responsibility in this area. As long as these deviations remain, Sweden is not judged to fulfil the necessary criteria for introducing the euro.
Should the Swedish Parliament in the future decide in favour of entry into the monetary union, the Riksbank will have to prepare technical and organisational changes so as to be incorporated into the single monetary policy and the relevant legislation. Moreover the Riksbank will need to be actively involved to follow the preparations in the financial sector so that a changeover to the euro can be made without disruptions to financial stability.
On a technical level, the Riksbank is linked to the TARGET payment system even while Sweden is outside the monetary union and can therefore act as an intermediary of payments in euros.