Read news from:
Austria
SHARE
COPY LINK

LIBOR

UK bank scandal must be ‘looked into’: Pagrotsky

The Libor scandal in London may have caused economic damages for Swedish tax-funded businesses, and ought to be looked into, said the Social Democrats’ tax investigator Leif Pagrotsky.

Published: 14 July 2012 10:06 CEST
UK bank scandal must be 'looked into': Pagrotsky

Pagrotsky called the Libor-rate an “international benchmark” with effects spreading far beyond London, reported the newspaper Svenska Dagbladet.

A scandal of Liborgate’s magnitude threatens to affect the public’s confidence in the entire market and the bank system globally, including Swedish banks, he emphasized.

Annika Falkengren, CEO of Swedish bank SEB, is also concerned of what effect the Libor scandal may have on the banking system.

“It’s devastating as a bank manager,” she said to Svenska Dagbladet.

Falkengren was unable to guarantee that interest rate manipulation could not occur in Sweden.

“That’s really hard to guarantee. However, the Swedish Stibor market is far smaller. But it’s in the industry’s interest to help clean up,” she said.

On their own initiative starting a few years ago, Swedish banks have been looking into how to make the Stibor rate, the Swedish equivalent of Libor, more transparent.

The Stibor rate is the interest rate that Swedish banks give each other.

Sweden’s Riksbank recently concluded in its stability report that the Swedish Stibor rate is functioning well, Falkengren noted.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

ECONOMY

Riksbank deputy ‘open to reconsidering raising rates in April’

Martin Flodén, the deputy governor of Sweden's Riksbank, has questioned whether the central bank needs to bring in further rate rises in April, following bank runs on two niche banks in the US and a crisis of confidence at Credit Suisse.

Published: 16 March 2023 16:20 CET
Riksbank deputy 'open to reconsidering raising rates in April'

Uncertainty in the financial market following bank runs in the US and a crisis at Swiss bank Credit Suisse could have changed the playing field, he told TT in an interview. 

“It affects which level the key interest rates need to be in order to have a contractive effect,” he said, referring to the recent days of financial market turbulence. “We can’t just look at key interest rates by themselves. It’s the key interest rate in combination with all of these developments which determines how tight financial policy will be.”

He said it was not yet obvious what decision should be taken. 

“It’s clear that monetary policy needs to stay tight, but what level of interest is that? We need to assess all of the current developments there.” 

‘Could go in different directions’

In theory, there could be such a serious financial crisis, with such a severe effect on lending and banks’ financing costs, that the central bank would be forced to adopt supportive measures, even lowering the key rate.

Flodén doesn’t think Sweden is in that situation, although he thinks there’s a possibility it could happen.

“It’s not something I can see happening right now, at least, although this could go in different directions.” 

He added that he doesn’t see any reason for any “special concern”, toning down the risk that a crisis for two smaller niche banks in the US and at Credit Suisse could affect the Swedish financial system.

“Of course, it could lead to some stress, but there aren’t actually any particular signs in Sweden, which are worrying me,” he said. 

Flodén is one of six members of the Riksbank executive board, led by Riksbank chief Erik Thedéen, responsible for making a decision on whether interest rates will go up again at the end of April.

The Riksbank has indicated that a rate hike of between 0.25 and 0.5 percent from the current 3 percent rate could be necessary.

Flodén described the most recent inflation statistics for February, where inflation unexpectedly rose to 12 percent, as “not good at all”. So-called KPIF inflation, where the effect of mortgage rates is removed, rose from 9.3 percent to 8.7 percent in January. The Riksbank’s goal is 2 percent.

“It’s clear that inflation is still far too high and that monetary policy needs to be focussed on combatting inflation,” he said, adding that inflation statistics for March will be released before the central bank is due to make a decision on whether to raise rates or not in April.

SHOW COMMENTS