Tougher rules await Swedish banks
“The financial crisis has revealed shortcomings in regulation and supervision”, Swedish Riksbank Governor Stefan Ingves said.
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During his professional career, Sweden's central bank governor Stefan Ingves has experienced two financial crises at close range. And he do not want to see a third.
“This is why I believe it is important to move from words to action and to make sure that the regulations and tools that make it possible for us to conduct effective stability work are put in place”, he said in a speech Thursday at the Swedish Bankers’ Association.
He pointed out that the financial crisis has revealed shortcomings in regulation and supervision and pitched for changes in the international regulation of banks, as well as the content of future efforts to prevent systemic risks with a focus on Sweden.
It’s not just about tougher regulations but also better international teamwork.
For example, the internationalisation of financial systems bring problems to national authorities as it’s difficult to limit systemic risks that develop outside their national borders.
“This demands the further development of cooperation between authorities in different countries. We also need to consider what more-specific measures we may be able to take to limit the risks that develop outside our borders”, Stefan Ingves said.
He also said that Swedish banks with large international operations might have to hold reserves denominated in currencies other than the Swedish krona.
"One alternative that may be considered in order to dampen this need is for the Riksbank to introduce a reserve requirement in currencies other than kronor if the banks have substantial exposures in foreign currencies”, he said.
The best solution for limiting liquidity risks is actions from the central bank or the financial supervisory authority in the country where the problems derives, Stefan Ingves said.
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Last Updated (Thursday, 19 November 2009 17:10)
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