Table of Contents
Monetary Authorities..
Central Bank of Sweden (Riksbank).
UC AB, the Swedish Business and Credit Agency...
Association of Commercial Banks of Sweden.
Direct and Indirect Exchange Rates between Swedish krona and other countries..
Stockholm Stock Exchange...
References.
Currency of Sweden
Sweden was the second country after Germany to join the EU in 1995, but it did not become a member of the euro area due to limitations in its political regime. The national Swedish currency is krona. One krona consists of 100 öre. ISO 4217 code of the currency is SEK, symbol - kr. To find out more about the currency of the country, it is necessary to look into the history and the present of the coins and banknotes.
In 1873 - 1876 bronze 1, 2 and 5 öre were issued, golden 10 and 20 kronor, as well as silver coins with values of 10, 25, 50 öre, 1 and 2 kronor. Since 1881 5 kronor coins of gold were also issued. Production of the golden coins was suspended in 1902 and renewed for a short period of time in 1920 and 1925, after which it finally stopped. In 1917 - 1919 due to the lack of metal during World War I coins were minted not of bronze, but of iron. Since 1920 coins of 10, 25 and 50 öre value were produced from an alloy of bronze and nickel, and since 1927 again from silver.
During the Second World War, the metal deficit once again caused changes in the Swedish coins minting. In 1940 - 1947 coins of bronze and nickel alloy appeared again with values of 10, 25 and 50 öre. In 1942 - 1952 again iron was used instead of bronze, and silver content of the other coins was reduced. Since 1952 coins with value of 2 kronor, 10, 25 and 50 öre were made from an alloy of copper and nickel, and since 1958 1 krona coins were issued from copper-coated alloy of copper and nickel (in 1982 it was minted entirely from an alloy of copper and nickel). In 1954, 1955 and 1961 silver 5 kronor coins were issued that look like modern coins of 1 and 2 kronor.
In 1962 a new smaller 5 kronor coin was introduced, made of nickel coated with an alloy of copper and nickel, the modern form of which was approved only in 1979. In 1971, production of coins in denominations of 1 and 2 öre ceased, as well as 2 kronor, in 1984 - 5 and 25 öre, and in 1991 - 10 öre. Since 1972 began minting of coins in the smaller value of 5 öre. Besides, in 1992 there were issued 10 kronor coins made of aluminum and brass alloy ("Nordic gold") and coins of 50 öre, painted in bronze.
Since September 30, 2010 all coins with öre values were cancelled and today, although goods can still be estimated in öre, when paying in cash the sums are usually rounded to the closest krona. The reason for this decision was the low purchasing power of these coins, and the impossibility of their use in most vending and parking machines. The coins that are still in use have values of 1, 5 and 10 kronor. According to the latest announcements of the Riksbank, the local central bank, in 2016 there will be new coins of values 1, 2 and 5 kronor. The 10 kronor coin will remain the same.
As for the banknotes, in 1874, the Swedish Central Bank put into circulation banknotes in values of 1, 5, 10, 50, 100, 1000 kronor. Banknote with 1 krona value was issued only for the first two years, and in 1914 - 1920. In 1939 and 1958, 10 000 kronor banknotes were issued. Five kronor bill wasn’t produced since 1981, while the 5 kronor coin was issued in 1972. In 1985, there was produced bill of 500 kronor value (Jonung, Kiander & Vartia, 2009). In 1991 after introduction of 10 kronor coins notes in value of 10 kronor ceased to be issued and the banknotes of 20 kronor appeared. Suspended in the same year, production of banknotes in 50 kronor was resumed in 1996. In 2006, the Swedish Central Bank put into circulation a new bill in 1000 kronor, which has security features developed by Crane AB Company from the Swedish town Tumba, issuing all Swedish banknotes.
Monetary Authorities
Central Bank of Sweden (Riksbank)
The leading role in the financial system of the country plays the world's oldest central bank of Sweden, founded in 1668. It has a monopoly on issuing the national currency (printing of banknotes and coins production is done by a state-owned enterprise), manages the gold and foreign exchange reserves of the country, is responsible for the formation of monetary policy and the functioning of the payment system. The main instrument of control over the operation of the payment system in the country is Riksbank funds transfer system RIX that unites all Swedish banks (Caprio, 2012).
Swedish Central Bank has an independent status and is subject to jurisdiction of the Swedish Parliament (Riksdag). The main tasks of the Central Bank of Sweden are the following:
Maintenance of price stability, reaching the target inflation index at the level of 2%;
Stabilization of the exchange rate;
Ensuring efficient, safe and reliable operation of the payment system;
Regulation of the internal banking operations;
Maintenance of the stability and resilience of the financial system, its constant monitoring and financial analysis (functions of a more general nature).
To accomplish this, the Swedish Central Bank is analyzing the financial position of the main banking groups and bank borrowers, after which the materials are covered in the media (Ohlsen & Bonetto, 2009). To fight the crisis in the country, the Central Bank of Sweden applied a solution that made it kind of a pioneer in the field of credit market regulation. Since July 2009, the regulator imposed negative interest rates on bank deposits. Thus, the repo rate is plus 0.25%, the rate on loans granted by the Central Bank of Sweden, - plus 0.75% and the deposit - minus 0.25%. Thus, the Central Bank of Sweden became the only central bank that, indeed, penalizes banks that place money on its deposits.
The reason for the introduction of negative interest rates on deposits was the "credit hunger," from which the Swedish companies suffered. Banks, fearful of defaults of their clients on debt, issued new loans with great difficulty. The current situation in the credit and financial market is gradually recovering.
Finansinspektion
The primary responsibility for maintaining the stability of the financial system of the country lies on the chief supervisor of monetary and insurance markets – the Swedish financial inspection. This organization is public body acting under the jurisdiction of the Ministry of Finance. The main functions of the inspection are the following:
Control of organizations, including banks, acting in the financial market;
Promotion of stability and efficiency in the financial system operation;
Promotion of consumer protection;
Issuing permissions and licenses to perform various operations in the financial market;
Issuing general guidelines and detailed rules for financial activities;
Appointment of auditors.
Under supervision of the Swedish Financial Supervision there are about 4 thousands of financial institutions (including 117 banks, 150 businesses that operate in the securities market, financial companies and financial groups, some of which are banks, investment companies, the Stockholm Stock Exchange, insurance companies, brokerage and Clearing Corporation, brokers, etc.).
Supervision is carried out in the following areas:
On the spot;
Remote monitoring based on constant or specific statements and other information about the activities of financial institutions. Banks provide quarterly financial statements electronically and daily if working with securities on foreign exchanges;
Risk and financial performance analysis (once a year a report on the risks and stress tests and measures (sanctions) received by the supervision is published).
UC AB, the Swedish Business and Credit Agency
The company is a leading Swedish business and credit information agency, created in 1973. The founders of UC AB were originally four largest system formation banks, now there are 7 of them. In their work UC AB are guided by the law published back in the XVII century on publicity and information disclosure, the law on Consumer Rights Protection, law on the credit bureau, etc. About 6 million of business decisions are made based on the annual reports of the company. Starting from 16 years information about each citizen is collected. Any citizen or legal entity can order relevant credit reports on legal entities and individuals.
To provide their customers with the best and the most relevant trainings in the field of credit at UC AB business school was established. With the help of partners from abroad UC AB receives sales records and credit history from around the world. There is also a system of online credit reports for European businesses and individuals. Original credit scoring system was developed for the subsequent analysis of the creditworthiness of individuals and entities, indicating the factors that affect their creditworthiness.
UC AB is the only information agency that has actual knowledge of business owners, based on data from the National Land Service. Databases are maintained in accordance with the latest developments in security. All information is encrypted and protected by passwords. Credit reports are provided in the online regime. Depending on the complexity of the report, the cost is about 10 euros. There is a system of discounts for large quantity orders. There is a condition when making an application to specify the purpose of the report (Porter & Prince, 2011).
The main sources of information for UC AB are the following: the Swedish Tax Agency, National Administration of Land Supervision, Department of Statistics, District Court, the State registrar of companies, certification companies, municipalities, the customs authorities, the Agency for Environmental Protection, Ministry of Health, the National Institute of Economic Research, law enforcement agencies (police, etc.), banks, credit and financial organizations, companies working with credit cards, travel agencies, annual reports, press articles and interviews, stock lists, the results of their own calculations, analyses and evaluations and other sources (Kisinbay et al., 2009).
Association of Commercial Banks of Sweden
The objectives of the Association of Commercial Banks is to consolidate efforts of banks, finance companies, mortgage lending institutions to protect their common interests and to provide comprehensive assistance to address the challenges they face.
The founders of the Association are: banks, finance companies, mortgage credit institutions and branches of foreign banks. The Association is a member of international organizations such as the European Banking Federation (EBF), the European Mortgage Federation (EMF), as well as investment company Eurofinance.
The main functions of the Association of Commercial Banks:
- Monitoring the implementation process of the operations of the association members in accordance with applicable laws and regulations;
- Holding seminars, conferences for members;
- Representation of the banking system at the international level, including the Association of European banks;
- Informing members and the public about the products of the financial market.
Direct and Indirect Exchange Rates between Swedish krona and other countries
Currency
Direct Exchange Rate
Indirect Exchange Rate
USA (US$)
SEK 7.88/US$
US$ 0.127/SEK
Australia (AU$)
SEK 5.794/AU$
AU$ 0.173/SEK
Canada (CAD$)
SEK 6.793/CAD$
CAD$ 0.15/SEK
England (GBP£)
SEK 13.61/GBP£
GBP£ 0.07/SEK
Euro (EUR€)
SEK 9.392/EUR€
EUR€ 0.11/SEK
Japan (JPY¥)
SEK 0.066/JPY¥
JPY¥ 15.1/SEK
SDR
SEK 11.289/ZAR
ZAR 0.09/SEK
Switzerland (CHF)
SEK 5.983/CHF
CHF 0.17 /SEK
Stockholm Stock Exchange
The Stockholm Stock Exchange (SSE) acquired the current organizational outlines on January 1, 1993, when it became an open joint-stock company. Up to that point SSE was a public organization, which played a significant role in trading government securities, since it was the government's work and it nominate directors on the board. Now SSE operates on the basis of contributions from members of companies and listing fees plus revenues from distribution of market data. The majority of SSE shareholders are among the Exchange members and companies that passed listing here.
The bulk of the SSE activity is stock trading through the electronic system SAX, the use of which is available only for the company members. Membership fees are directly related to the number of transactions. There is a possibility to work with the shares belonging to the so-called A list (stock exchange trading), OTC list (small and medium-sized firms) and 0-list (over-the-counter trading). Listing fees depend on the amount of market capitalization. Clearing on member firms transactions is conducted by the Riksbank, the depositary being VPC (Swedish Central Securities Depository). With the help of SAX bonds, debentures, options and indexes are also sold. Scandinavian order in trade maintains strict rules of exchange operations and special arrangements between the exchange and traders, according to which they (traders) have virtually no loopholes that allow concealing information important for pricing (Campbell, 2008).
Despite the traditional northern stability and, therefore, small speculative opportunities, Swedish shares (Scania and Astra) are popular in the NYSE, which boosts the domestic market and is an evidence of its international competitiveness. The number of SSE members is growing, largely due to foreign institutions.
Thrifty Swedes built their first stock exchange in Stockholm in 1778, using specially introduced customs duties on imported luxury items. Trade was mainly merchandise. In small quantities government loans and marine insurance were sold. Real securities trading began in 1863 by royal decree: on February 4, at 14.00, the first auction was concluded with 22 transactions totaling 14’105 thalers.
References
Campbell, D. (2008). International Securities Law and Regulation. England: Yorkhill Law Publishing.
Caprio, G. (2012). Handbook of Key Global Financial Markets, Institutions, and Infrastructure. London: Academic Press.
Jonung, L., Kiander, J., & Vartia, P. (2009). The Great Financial Crisis in Finland and Sweden: The Nordic Experience of Financial Liberalization. Glos: Edward Elgar Publishing.
Kisinbay, T., Shimizu, S., Nordstrom, A., Restrepo, J., Roger, S., & Stone M.R. (2009). The Role of the Exchange Rate in Inflation-Targeting Emerging Economies. Washington: International Monetary Fund.
Ohlsen, B., & Bonetto, C. (2009). Sweden. New York: Lonely Planet.
Porter, D., & Prince, D. (2011). Frommer's Sweden. New Jersey: John Wiley & Sons.
