Sweden Calls on Banks to Take Responsibility as Virus Spreads
Sweden Calls on Banks to Take Responsibility as Virus Spreads
(Bloomberg) --
Sweden’s government called on the country’s banks not to be derailed by the coronavirus’ spread and to continue lending to support the economy.
Financial markets minister Per Bolund said he’ll meet with banks shortly to “stress the importance of taking responsibility” as the outbreak threatens to throw a wrench into the country’s financial system.
Banks “must now be prepared to be offensive in the face of a potential weakening of the economy, and not act in a way that exacerbates a downturn,” Bolund said at a press conference in Stockholm.
Among relief that government agencies can provide banks is to lower countercyclical capital buffer requirements. Sweden and Norway have Europe’s highest requirement, at 2.5%. The buffers are designed to be raised to tame excessive lending growth, and to be lowered when periods of stress could lead to losses.
“The risk is that banks become cautious,” and exacerbate a downturn by tightening access to credit, Bolund said. The government is following the industry closely, and so far there’s no sign of credit drying up, he said.
Sweden’s government is ready to take additional steps if necessary, including supporting housing market. Bolund said, “There are no signs of any rapid effects as of now, but if there are large changes we will be prepared to look at all tools.”
To contact the reporter on this story: Niclas Rolander in Stockholm at nrolander@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Frances Schwartzkopff
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