Swedish central bank seeks billions to restore capital base
Sweden's central bank, the Riksbank, said it requires an injection of 80 billion kronor ($7.2 billion) to restore its capital base after making a large loss last year.
Last year the bank lost just over 80 billion kronor leaving it with negative equity of 18 billion.
"The loss and negative equity are due to the sharp rise in interest rates in 2022," said governor Erik Thedéen.
"This has led to a fall in the value of the bonds purchased by the Riksbank during the period 2015-2021 to maintain confidence in the inflation target, secure the credit supply during the coronavirus pandemic and contribute to good economic development."
The bank said the fact it had gone into the red "does not affect the Riksbank's ability to conduct monetary policy in the short term.
"But to maintain confidence in an independent monetary policy in the long term, it is necessary that the Riksbank is financially independent, that is, has sufficient equity and earnings to cover its costs," Thedéen explained.
A law which came into force this year stipulates that the bank must have a minimum equity of 40 billion kronor.
The law requires the bank otherwise to petition parliament to restore its coffers, which it will now do with a request to be formulated next March.
"In general, any capital injection would be accounted as an expenditure and increase the borrowing requirement of the central government," Mikael Asell, secretary of parliament's finance committee, told AFP.
Asell added no formal request had yet been made.
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Last year the bank lost just over 80 billion kronor leaving it with negative equity of 18 billion.
"The loss and negative equity are due to the sharp rise in interest rates in 2022," said governor Erik Thedéen.
"This has led to a fall in the value of the bonds purchased by the Riksbank during the period 2015-2021 to maintain confidence in the inflation target, secure the credit supply during the coronavirus pandemic and contribute to good economic development."
The bank said the fact it had gone into the red "does not affect the Riksbank's ability to conduct monetary policy in the short term.
"But to maintain confidence in an independent monetary policy in the long term, it is necessary that the Riksbank is financially independent, that is, has sufficient equity and earnings to cover its costs," Thedéen explained.
A law which came into force this year stipulates that the bank must have a minimum equity of 40 billion kronor.
The law requires the bank otherwise to petition parliament to restore its coffers, which it will now do with a request to be formulated next March.
"In general, any capital injection would be accounted as an expenditure and increase the borrowing requirement of the central government," Mikael Asell, secretary of parliament's finance committee, told AFP.
Asell added no formal request had yet been made.
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