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Exchange rate regime
Sweden has had a floating exchange rate since November 1992. It is the government that decides what exchange rate regime Sweden shall have, while the Riksbank decides on how the regime is applied.
Cash in circulation
There is around SEK 100 billion in the form of banknotes and coins in circulation in Sweden.
The foreign exchange reserve
The gold and foreign exchange reserve amounted to around SEK 195 billion on 31 December 2005, of which some SEK 22 billion was gold.
One of the Riksbank's main tasks is to conduct monetary policy. The objective of monetary policy in Sweden is to achieve price stability. More specifically inflation is to be maintained at 2 per cent plus/minus 1 percentage point.
The Riksbank's primary instrument of monetary policy is the repo rate. This is changed with the aim of influencing other interest rates in the economy and thereby economic activity and inflation.
Monetary policy is implemented in practice through open market operations in the money and FX markets. The Riksbank deals primarily with those counterparties that have signed an agreement with the Bank. In order to become a counterparty certain requirements must be met.
Management of the foreign exchange reserve
Financial asset management at the Riksbank
At end 2005 the Riksbank's financial assets were valued at approximately SEK 200 billion. Foreign fixed-income securities made up the major item and the other items included gold, monetary policy repos and currency swaps. In the article "Financial asset management at the Riksbank" by Tomas Ernhagen and Fredrik Olsson, we describe the principles and considerations that underlie the long-term direction of investment in these assets.
The banks’ bank
The RIX system, the Riksbank’s system for the settlement of payments, can said to be the hub of the Swedish payment system in that all payments between banks and other agents eventually pass through RIX. The Riksbank thus functions as the banks’ bank in the settlement of payments in Swedish kronor.