The Organisation of the Swedish Money Market

Abstract

IT is possible that the title of this article will give the reader the impression that there exists in Sweden a money market of the same type as in England or some parts of the Continent. But to use banking system instead of money market would be equally misleading, as Swedish banks have a much wider sphere of activity than at least the English banks. In fact, the work done in England by the joint-stock banks, the discount houses and billbrokers, the Stock Exchange dealers and brokers, etc., is in Sweden concentrated in the banks. The money market is, in reality, identical with the private banks' and the central bank, the Riksbank. The only open markets are the stock market and to some extent the foreign exchange market. The Riksbank is the centre of the money market. It is a State institution governed directly by Parliament, the Riksdag. The Government has no other influence on the management of the Bank than that they appoint one of the directors, who is also the chairman of the Board. At first, the Bank, which was constituted in i668, was a commercial bank, dealing directly with the public. For a long time it was, in -fact, the only bank in Sweden. But during the last decades after I903, when it obtained the monopoly of issuing notes, it has gradually changed into a bankers' bank only. Thus in I9I3, 6 per cent. only of the assets were in the form of advances and discounts to private customers. The Bank has the right of issuing notes to an amount of twice the gold reserve and, in addition, a fixed amount -of 125,000,000 kronor. In case of war or severe monetary crisis, the fiduciary issue might be increased by another 125,000,000 kronor. The fiduciary issue is covered by gilt-edged Swedish securities and foreign Government bonds or loans against such securities, inland or foreign bills, and foreign bank balances. In Sweden, the bank note is of much greater importance as a means