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Riksbank Raises Lending To Address Credit Shortage Amid Covid-19 Outbreak

Sweden's central bank decided to provide loans to companies in order to supply credit and limit the negative effects of the coronavirus pandemic.

At an extraordinary meeting, the Executive Board of the Riksbank decided to lend up to SEK 500 billion to companies via the banks. The aim is to maintain the supply of credit to companies.

The turbulence on the financial markets means that companies that are essentially robust may experience funding difficulties, Governor Stefan Ingves, said. It is then important that the banks continue to provide these companies with loans so that the credit supply is not threatened.

To make the lending facility attractive to banks, the loans will be granted at a variable interest rate equivalent to the Riksbank's repo rate and with a maturity of two years.

The bank said it is prepared to take further measures and to supply necessary liquidity.

All of the Riksbank's tools can be put to use, the bank said in the statement. "How the tools are used will depend on future developments."

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