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Sweden 'fully prepared' for Greek fallout : Borg

TT/The Local · 7 May 2010, 15:32

Published: 07 May 2010 15:32 GMT+02:00

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"We have a difficult situation on the international financial markets rooted in the problems and troubles not only in Greece, but also further influenced by the situations in Spain and Portugal," said Anders Borg, adding that Sweden is fully prepared for any worsening of the situation.

"The Financial Supervisory Authority [Finansinspektionen - FI] and the Riksdag [Sweden's central bank] have stated that we have limited exposure to the relevant countries. Swedish banks are well capitalized and have an emergency preparedness that is resilient," he said.

European investors breathed a sigh of relief after Germany's parliament, the Bundestag, approved as much as 22.4 billion euros ($28.6 billion) in loans to Greece on Friday.

The Ministry of Finance has been in close contact with the Financial Supervisory Authority and the Riksbank in recent days. According to Borg, the responsible authorities have all the capabilities they need to address an emergency.

"The Riksbank has concluded that the market is functioning today, but has everything in place to ensure liquidity in the Swedish financial system, as it did a year ago," said Borg.

Robert Bergqvist, chief economist at SEB, believes that many small investors will continue to quit the stock market during the day.

"It is the most likely scenario when you had so sharp movements in the U.S. yesterday and we had a big event in recent days," said Bergqvist. "I cannot see anyone in this situation who would go in and take the opportunity to buy shares. As the situation stands, I think many will sit on the sidelines of the stock market today."

While European investors breathed a sigh of relief after Germany's parliament, the Bundestag, approved as much as 22.4 billion euros ($28.6 billion) in loans to Greece on Friday, the sells off of assets linked to the debt crisis in the euro zone continued. Share prices dropped across the board and foreign exchange markets reeled as investor fled to gold and the US$.

Story continues below…

On the credit default swap (CDS) market, in which the protection buyer of the CDS makes a series of payments to the protection seller and, in exchange, receives a payoff if a credit instrument goes into default, risk premiums for Greece, Portugal and Spain continued to rise. In order to insure against Greece cancelling payments, one can pay 9.5 percent of the loan in insurance on the CDS market, 0.17 percentage points higher than on Thursday.

Prime Minister Fredrik Reinfeldt said that Sweden will continue to closely follow developments in Greece.

TT/The Local (news@thelocal.se)

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Your comments about this article

16:22 May 7, 2010 by hardonforswedes
Sweden is drop in a big ocean who cares what these insignificant people say
16:29 May 7, 2010 by miss79
wat?i tot sweden are recovered in financial crisis?now sliding again?another "UK" scandinavia perhaps?
16:48 May 7, 2010 by StockholmSam
Hey Hardon,

This isn't about Sweden's influence on the global economy, it is about how the European economic problems will impact Swedes. Pretty important issues in play right now and if you live in Sweden, Greece's downfal has potential to screw you and me.
17:01 May 7, 2010 by calebian22
Borg's constipated look doesn't inspire confidence.
17:06 May 7, 2010 by EtoileBrilliant
What does he mean by "fully prepared"?

Can Sweden deal with:

- default of 3 to 4 Eurozone members

- worsening conditions in the Baltic republics

- a 30% drop in Swedish house prices.
19:23 May 7, 2010 by Analyst
This guy is really suffering from megalomania.
23:36 May 7, 2010 by mikmak
Greece is drop in a big ocean who cares what these insignificant people say

The drop that spilled the glass
02:40 May 8, 2010 by Thebinary1
Where are the d!ckheads who wanted to kill the Kroner and replace it with the Euro. Come out come out wherever you are you hypocritical bastards!
02:45 May 8, 2010 by GLO
Sweden has many of the CORE PROBLEMS as in the other Socialist Countrys. Sweden is tied at the neck with the World Economy. Dont trust any leader...No one KNOWS the future..

All problems are local, you will have to deal with your own productivity, watch your own backs.
11:09 May 8, 2010 by Elton John
The question is whether or not Sweden is fully prepared for Mona Sahlin and her communist friend Ohly.
15:04 May 8, 2010 by wenddiver
Many small investors will sit on the side????????? Are we stupid or what!!!! That's when you make mad money. When there is risk, there is opportunity in stocks. That is when the rich buy, when everything is on sale! Do you think people are going to stop drinking Coca-Cola (KO)? Eating McDonalds(MCD)? Driving FORDS (F)?? Smoking R.J. Reynolds and Phillip Morris Cigarettes (MO)???? Shopping at IKEA???? Wearing Helly-Hansen Jackets???? Flying Continental???

If you had the choice of having your money in stock in Coca-Cola which pays a $1.70 dividend, has the track record of the stock going up and splitting or invested in this play money we call the EURO (by the way he left out Ireland that is nearly in collapse to).

In the short term stocks are unstable, in the long tern (ten to twenty years) it will be where everybody who is rich was. We are in a room with $100 dollar stocks on the floor for sale for between $1.00 and $27.00, anybody who is not considering grabbing some is NUTS.
23:37 May 9, 2010 by Debaraja
"The Financial Supervisory Authority [Finansinspektionen - FI] and the Riksdag [Sweden's central bank] have stated...

I presume you meant to write Riksbanken but instead you wrote Riksdag.
09:51 May 10, 2010 by Kronaboy
Why the hell should my hard earned taxes pay to support a corrupt and dishonest regime who has used Goldman Sachs to fraudulently hide their debts in order to lie and cheat their way into the Euro Zone. We shouldn't be supporting the Greeks we should be kicking the entire lying cheating nation out of the EU. Besides this loan isn't getting rid of the problem it's just postponing it for 3-5 years when it will come back with even more vengeance, it will be all right for Angela Merkel and her Greek loving chums, they'll all be long gone by then.
20:54 May 10, 2010 by Debaraja
@ Kronaboy

One cannot but admire your in depth analysis of the subject! I must say that you have a point though. Yes, it appears that Greece has been cheating all these years, but do you believe that the international affairs is something similar to been kicked out of a pub because you are drunk?

I like the simplified way you see (not) things, it's amusing. Greeks are cheating, Kick 'em out, Germans like the Greeks (international affairs turned into love affairs), kick 'em out, Swedes do not join the euro zone, do not support them when in need, Britons drive on the "wrong" side of the road, kick them out and so on... Very realistic indeed!
13:05 May 11, 2010 by Kronaboy

and your point is.
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