Sweden ‘well-equipped for downturn’: Riksbank

Swedish central bank chief Stefan Ingves has said the country is financially strong and well prepared for the challenges posed by a global economic downturn.

In a speech given to the Swedish Confederation of Professional Associations on Wednesday, Ingves said the Riksbank had taken steps to improve market functioning and was of the opinion that Swedish banks had displayed sufficent financial stability under pressure.

“What is happening now has not come as a bolt from the blue. The financial turbulence has now been under way for more than a year. We have constantly monitored developments and made the assessment that financial stability has been satisfactory.

“This is also the assessment we make today. If it should prove necessary, we are prepared to take further measures,” he said.

But not all observers shared Ingves’s positive analysis. Jörgen Appelgren, chief economist at Nordea bank, felt the Riksbank was not putting all its cards on the table.

“Maybe they are more aware of how shaky things have been at times than they want to reveal officially,” he told news agency TT.

George Ulvelius, investment manager at the Legal, Financial and Administrative Services Agency (Kammarkollegiet), said the Swedish market for mortgage bonds, which are used by lending institutions to finance mortgages, had ceased to function.

“The market has more or less stopped,” he told TT.

Ulvelius added that the global financial situation had given rise to a number of rumours.

“There’s a lot of psychology. There are a lot of rumours about Swedbank. But that doesn’t necessarily mean there’s any substance to them,” he said.