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Swedish government sets tougher requirements on banks as a buffer for a possible next financial crisis

Monday, 26 August 2013
The Swedish Financial Services Authority, Finansinspektionen (FI) is excited that it has been provided with a new powers to put pressure on Swedish banks to reduce their over reach and work harder to earn their huge profits.

Today the Swedish government presented an approach on how banks should help pay for the huge foreign exchange reserves, in order to create macro economic stability and stem any new financial crisis.

According to the new powers given to the Financial Supervisory Authority, (FI) it will be responsible for new instruments to strengthen financial stability, the government proposal presented today indicates.

The proposal establishes a financial Stability Council and require banks to co-finance the cost of the need for an extra reserve of foreign currency due to their extensive foreign currency funding, writes Financial Markets Minister Peter Norman on the Swedish daily Dagens Nyheter.
According to FI, it gets a renewed mandate to work for financial stability and responsibility to take care of all regulatory tools, including banks to set aside more capital for high credit growth, the so-called counter-cyclical buffers.
FI welcomes the establishment of a financial Stability Council with representatives from the FI, the Riksbank, the National Debt Office, and the government as they feel that this will create regular and open discussion on risks in the financial system and provide suggestions.

FI acknowledges that this is something that it previously proposed and which is close to the voluntary advice FI and the Riksbank had in recent years.
“It is good that all agencies are coming with clear mandates on who is responsible for what and how we should work together. For too long it has been decided behind closed doors and it is good that the time for that has now passed,” Martin Andersson, general director of FI in a press release
By scancomark.com Team