Read news from:
Austria
SHARE
COPY LINK

CURRENCY

Riksbank urges Sweden to ditch 50 öre coin

The Riksbank wants Sweden to ditch the 50 öre coin, currently the smallest denomination of the country’s currency.

Published: 18 December 2008 11:07 CET
Riksbank urges Sweden to ditch 50 öre coin

The central bank on Thursday issued a call to the Riksdag to enact a law which would invalidate the coin, which is worth half a krona ($0.07), as legal tender by September 30th, 2010.

“The Riksbank’s statistics indicate that the 50 öre coin is used increasingly rarely as a means of payment,” the bank said in a statement.

“According to a survey of the general public commissioned by the Riksbank, two out of three respondents consider that the coin is no longer necessary. The retail trade would also prefer the coin to be abolished.”

The suggestion comes from an ongoing examination about Sweden’s coins and currency.

“We’re also looking at the 1000 kronor bill. We’ve seen a reduction in demand for the 1000 kronor bill,” said Leif Jacobsson, a project leader at the Riksbank, to the TT news agency.

The small, copper-coloured 50-öre coins have been Sweden’s smallest denomination coin since 1992 when the 10 öre coin was taken out of circulation.

Should the 50 öre coin also disappear, the 1 krona coin would become Sweden’s lowest denomination coin.

The Riksbank added, however, that even if the 50 öre is discarded, the “öre” will remain as an arithmetical unit for payments and transactions.

“Electronic payments made, for instance, by card will not be affected if the 50 öre coin is abolished. Cash payments, on the other hand, will need to be rounded off to the nearest krona instead of to the nearest 50 öre,” said the Riksbank.

According to the bank, abolishing the 50 öre coin will not likely affect the consumer price index (CPI), from which the bank calculates Sweden’s rate of inflation.

Jacobsson said the Riksbank’s final report on possible currency and coin changes will be submitted to the bank’s leadership sometime in the spring.

Other changes under discussion include a re-introduction of the 2-kronor coin, the launch of a 200 kronor bill, and possibly replacing the 20 kronor bill with a coin.

ECONOMY

Riksbank deputy ‘open to reconsidering raising rates in April’

Martin Flodén, the deputy governor of Sweden's Riksbank, has questioned whether the central bank needs to bring in further rate rises in April, following bank runs on two niche banks in the US and a crisis of confidence at Credit Suisse.

Published: 16 March 2023 16:20 CET
Riksbank deputy 'open to reconsidering raising rates in April'

Uncertainty in the financial market following bank runs in the US and a crisis at Swiss bank Credit Suisse could have changed the playing field, he told TT in an interview. 

“It affects which level the key interest rates need to be in order to have a contractive effect,” he said, referring to the recent days of financial market turbulence. “We can’t just look at key interest rates by themselves. It’s the key interest rate in combination with all of these developments which determines how tight financial policy will be.”

He said it was not yet obvious what decision should be taken. 

“It’s clear that monetary policy needs to stay tight, but what level of interest is that? We need to assess all of the current developments there.” 

‘Could go in different directions’

In theory, there could be such a serious financial crisis, with such a severe effect on lending and banks’ financing costs, that the central bank would be forced to adopt supportive measures, even lowering the key rate.

Flodén doesn’t think Sweden is in that situation, although he thinks there’s a possibility it could happen.

“It’s not something I can see happening right now, at least, although this could go in different directions.” 

He added that he doesn’t see any reason for any “special concern”, toning down the risk that a crisis for two smaller niche banks in the US and at Credit Suisse could affect the Swedish financial system.

“Of course, it could lead to some stress, but there aren’t actually any particular signs in Sweden, which are worrying me,” he said. 

Flodén is one of six members of the Riksbank executive board, led by Riksbank chief Erik Thedéen, responsible for making a decision on whether interest rates will go up again at the end of April.

The Riksbank has indicated that a rate hike of between 0.25 and 0.5 percent from the current 3 percent rate could be necessary.

Flodén described the most recent inflation statistics for February, where inflation unexpectedly rose to 12 percent, as “not good at all”. So-called KPIF inflation, where the effect of mortgage rates is removed, rose from 9.3 percent to 8.7 percent in January. The Riksbank’s goal is 2 percent.

“It’s clear that inflation is still far too high and that monetary policy needs to be focussed on combatting inflation,” he said, adding that inflation statistics for March will be released before the central bank is due to make a decision on whether to raise rates or not in April.

SHOW COMMENTS