Analysis: The Riksbank believes in a severe corona shock to the Swedish economy

Being tough against banks and crises is the Governor of the Riksbank Stefan Ingves parade branch. He coldly pointed out during the Riksbank's press conference that if the banks do not continue to lend money and at the same time distribute large profits to their owners, they should "consider how the Swedish people would receive such a message". An icy approach to the banks' major owners about the consequences of not taking their corporate social responsibility.

Both the Riksbank and the Swedish Financial Supervisory Authority are now taking their toes. The Riksbank when it makes available SEK 500 billion through loans at zero interest rates that the banks can lend to companies. The Financial Supervisory Authority temporarily delays the countercyclical buffer capital requirements. Simply explained, it is later on that banks now do not need to have collateral for part of their loan portfolio. It estimates Finansinspektionen gives the banks the opportunity to lend an additional SEK 800-900 billion. It is a huge economic bazooka that is being postponed - which in all likelihood is not fueling the imbalances in the economy but instead giving individuals and businesses the help they need for the next six months.

It is obvious that the Riksbank expects that the corona pandemic will cause a recession in Sweden in the coming quarters and that many companies in a number of industries may find it difficult when much in Sweden is on hold to limit the spread of infection. While the industry still had a couple of good years before the economy slowed down last year, both the airline and travel industry have balanced on the slack line before this crisis was triggered. The financial support package also gives respects to the government and the Riksdag to spend a little more time preparing the efforts that will be needed.

Historically, a pandemic has lasted for several months - but no one knows how long we must limit our way of life to limit the spread of infection.

What the Riksbank wants to avoid is that there will be unnecessary bankruptcies for entrepreneurs, or that private individuals will get a strained private economy because of this crisis. The Riksbank, the Swedish National Debt Office and the Swedish Financial Supervisory Authority also want to avoid the virus not only paralyzing us people but also the financial market. This happened in 2008 when banks stopped lending to each other after the Lehman crash, and in the next step did not lend to companies. Then the economic crisis could be even worse.

Although some hoped that this money would come even sooner, it is a welcome initiative, along with the proposals that the government has submitted regarding, among other things, abandoned waiting day and postponement of tax payments for companies.

No one knows if we have seen the bottom of the stock market turmoil. Initially, the stock exchanges reacted positively to these major measures announced by the US Central Bank, the Swedish Riksbank and also that the German government provides a lot of money.

As long as the uncertainty is great about how people, communities and the economy are affected, stock exchanges around the world will continue to react with violent fluctuations on different kinds of message.