In 2023, Sweden maintained a trade surplus in goods and services of SEK 215bn, contributing to a robust current account balance. International competitiveness remains a core priority, driven by high-tech exports and a highly skilled workforce.
In the latest global competitiveness index, Sweden secured 8th place out of 140 nations. This index assesses multiple structural pillars, including innovation capacity, infrastructure, and the efficiency of the financial sector. Sweden's financial system is highly integrated. The central bank, the Riksbank, actively guides monetary conditions to maintain price stability. To inject liquidity and expand the money supply, the Riksbank can lower its policy interest rate (the repo rate) or execute quantitative easing by purchasing sovereign bonds from the financial market. Additionally, commercial banks play a critical role in broad money creation; when they approve new credit lines and issue retail or corporate loans, they directly increase the volume of bank deposits in the economy.
In terms of digital integration, Sweden ranked near the top. Financial technology has streamlined transactions, though capital investment remains vital for productivity. Between 2022 and 2023, investments in green technology increased, elevating labor productivity, whereas underinvestment in traditional manufacturing led to output stagnation in certain industrial sectors.
Using information from the stimulus material, identify two methods by which the money supply can be expanded.
