Swedish banks shouldn’t worry about the problems in Latvia, Sweden’s central bank governor Stefan Ingves said.

Sweden’s Finance Minister last week said political signals from Latvia were “worrying”, making Swedish banks plunge on the Stockholm stock exchange.

However, on Monday Stefan Ingves said Swedish economy and banking sector are not at risk from problems in Latvia, Reuters reported.

"No, I am not worried," he told reporters at the International Monetary Fund meeting in Istanbul. "Given the size of the Swedish economy relative to the size of the Latvian economy, what is going on in Latvia won't affect the Swedish economy that much," he said.

Swedish banks SEB and Swedbank are heavily exposed to the troubled Baltic markets but Stefan Ingves said that the losses are manageable.

"Swedish banks are big in Latvia, but still, in terms of capital and (the) business that they have elsewhere, the situation is manageable for Swedish banks," Ingves said.

Speaking at the Baltic Development Forum in Stockholm, Swedish Prime Minister Fredrik Reinfeldt said Latvia “must correct” its budget gap and fulfill the terms of its international aid package, Bloomberg reported.

“The Latvian economy has large imbalances and these must be corrected,” Fredrik Reinfeldt, whose country holds the rotating European Union presidency until the end of this year, told reporters.