The initiative was announced in a joint press conference by finance minister Anders Borg and prime minister Fredrik Reinfeldt, who also commented on an agreement reached at the weekend by European Union leaders regarding a joint approach to dealing with the crisis.
“This is the first important step toward meeting the need for confidence building measures against the financial crisis. It shows that Europe’s politicians are now acting collectively in a way which may not have been possible in the United States,” he said.
According to Borg, the new legislation means that every country takes responsibility for creating state guarantees for banks’ finances.
Sweden’s proposal will include state-guaranteed lending through December 31st, 2009, as well as provisions designed to strengthen the banking sector through the issuing of share capital.
“It’s a very effective measure for rebuilding confidence in the banks,” said Borg.
A third part of the plan will include mechanisms for banks to restructure.
“This is important lesson from the Swedish banking crisis,” said Borg.
Borg characterized the EU-15 plan announced on Sunday night as a set of traffic regulations to guide the actions of individual member states.
According to him, the government also plans to review the deposit guarantee and is open to raising the upper limit even further as a part of the new measures.
Several other countries have raised their deposit guarantees much more than Sweden, despite the fact that Sweden recently doubled the guarantee to 500,000 kronor ($70,500).
According to Henrik Mitelman, a stock analyst with SEB bank, the new measures are a confirmation that Sweden is ready to act and adopt measures reflecting the actions taken by Europe’s largest economies.
“It’s a confirmation that Sweden will adopt the rules which are now being introduced in the rest of Europe,” he said.
Mitelman believes the set of measures announced by European leaders in Paris on Sunday will more or less be matched by a similar programme in Sweden.
“It would almost be unsustainable if we were to deviate to much from the rest of Europe,” he added.