Sweden to set up new bank crisis fund

AFX/The Local
AFX/The Local - [email protected] • 14 Oct, 2008 Updated Tue 14 Oct 2008 13:32 CEST

Sweden's Financial Markets Minister Mats Odell said on Tuesday the government was planning to unveil plans for a new fund to help bail out banks in the event of a financial emergency.


Odell, speaking with journalists, said the fund would be financed both by the state and the private sector. He also said the fund would be run by the National Debt Ofiice (Riksgälden).

“The government is going to act swiftly so that business owners and citizens have the ability to get credit,” said Odell, according to the TT news agency.

The minister also repeated that Swedish banks did not have a liquidity problem and he added that any injection of capital into one would involve the state receiving preferred shares in the institution in return.

The government also plans to give the Swedish Financial Supervisory Authority (Finansinspektionen – FI) increased oversight to ensure that the new resources offered to banks are used appropriately.

“It’s to make sure that no companies or citizens face unduly harsh conditions during the time the guarantee is in place,” said Odell.

According to Odell, the Swedish authorities have determined that raising the state savings deposit guarantee further isn’t necessary.

“If we then raised the guarantee, it could send signals that we don’t really believe in this,” he said.

Odell said the government planned to present a financial stability proposal next week.

Social Democratic economic policy spokesperson Thomas Östros said he welcomed the government’s invitation to join the discussion, noting that the opposition will present its views on the plan on Thursday.


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