Riksbank sees ‘light at end of the tunnel’

Riksbank sees 'light at end of the tunnel'
As it announced further measures to ease strained credit markets on Monday, the Riksbank said that the recent international action to restore confidence to the markets had brought light to the tunnel of the global financial crisis.

In a statement issued as stock markets rallied strongly after weekend announcements by top finance ministers and central bankers around the world, the Swedish central bank said the action was a “success.”

“We are now seeing light at the end of the tunnel with regard to the ongoing financial crisis,” Riksbank governor Stefan Ingves said in the statement.

The world financial system has been shaken to the core with ever increasing violence over the last three weeks as banks struggle to stay afloat and credit has been squeezed.

“The fact that the world’s finance ministers and central bank governors were able to agree at the weekend on a five-point plan to restore confidence in the financial markets is a major success,” the central bank said.

The Swedish stock market had rallied by 7.44 percent by mid-day.

At the same time, the Riksbank said I would lend an additional $10 billion and 80 billion kronor ($11.3 billion) in additional auctions to be held this week, with each loan carrying a three-month maturity.

“The Riksbank has taken a number of measures at regular intervals in recent weeks to facilitate the supply of credit and improve the functioning of the financial markets. We will continue with this until confidence has been restored and the supply of credit to companies and households is once again functioning normally,” said Ingves.

The Riksbank has taken a number of measures to bolster the liquidity of Sweden’s bank, both in US dollars and in Swedish kronor.

The bank also said it planned additional measures to facilitate loans from banks to companies outside the financial sector.