10 Kronor – Sweden

In 2001, Sweden was in the midst of a sustained and deliberate experiment with monetary policy, having unilaterally adopted an inflation-targeting framework after the collapse of the European Exchange Rate Mechanism (ERM) in 1992. The Riksbank, Sweden's central bank, had set a clear target of 2% annual inflation (with a tolerance band of ±1%), and by 2001, this framework was widely credited with delivering price stability and credibility. The Swedish krona was a freely floating currency, with its value determined by market forces rather than being pegged to another currency or basket. This independence allowed the Riksbank to set interest rates solely based on domestic economic conditions, primarily to steer inflation towards its target.

The year itself was characterized by a relatively strong krona and concerns about economic slowdown, following the burst of the global dot-com bubble. The Riksbank's main policy rate, the repo rate, was at 4.0% at the start of the year, but facing weaker global demand and subdued inflationary pressures, the bank embarked on an easing cycle. It cut the repo rate four times during 2001, bringing it down to 3.5% by December, in an effort to stimulate the domestic economy. A significant backdrop was Sweden's ongoing political debate about potential future adoption of the euro, following its entry into the European Union in 1995. The 2003 referendum on euro membership was already on the horizon, adding a layer of political uncertainty to long-term currency expectations.

Despite the domestic easing, the krona remained firm for much of the year, partly due to Sweden's sound public finances and strong current account surplus. However, the currency was not immune to global volatility, experiencing pressure following the terrorist attacks on September 11, 2001, which caused a flight to safety and strengthened traditional havens like the US dollar and Swiss franc. Overall, the currency situation in 2001 was one of stability under a transparent inflation-targeting regime, with proactive central bank management to counter external shocks, all set against the looming political question of European Monetary Union integration.