Swedish central bank needs to restore its capital: governor

SWEDEN’S central bank needs to have its equity restored to at least 40 billion Swedish kronor (S$5 billion), Riksbank governor Erik Thedeen said on Tuesday (Oct 24).

“As per the end of September 2023, a restoration to the basic level would entail a capital injection of almost 80 billion kronor. The Riksbank also needs prospects for additional earnings,” Thedeen said in a statement.

The Riksbank last year made a loss of around 80 billion crowns, resulting in negative equity of 18 billion, due to a sharp rise in interest rates which led to a fall in the value of bonds bought by the bank between 2015 and 2021.

The aim of the bond purchases was to maintain confidence in the inflation target, secure credit supply during the pandemic and contribute to good economic development.

New legislation introduced this year stipulates the Riksbank’s equity should have a target equity level of 60 billion kronor, and a basic level of 40 billion.

Thedeen said the bank plans to submit a request to parliament in March about a capital injection, and possibly also proposals for additional earnings capacity.

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The size of the capital injection in the petition will be based on the Riksbank’s 2023 equity and results, which are due in February, he said. REUTERS