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OFFBEAT

Central bank reveals location of Sweden’s gold

Sweden is in possession of just over 125 tonnes of gold - a market value of 37.5 billion kronor ($5.9 billion) - and the country's central bank revealed on Tuesday exactly where it's being kept.

Central bank reveals location of Sweden's gold

Information on the whereabouts of the Swedish Riksbank's gold reserves, which weigh in at 125.7 tonnes and are roughly equivalent to 10,000 gold bars, was revealed on Tuesday after discussions with the central banks of four countries around the world.

The gold is stored mostly in the Bank of England, where 61.4 tonnes of it is kept, amounting to 48.8 percent of the total. The next biggest storage is in the Bank of Canada, where 33.2 tonnes or 26.4 percent is kept, followed by the Federal Reserve Bank of New York with 13.2 tonnes, or 10.5 percent.

The Swiss National Bank, meanwhile, keeps 2.8 tonnes or 2.2 percent, and 15.1 tonnes of the gold are kept on home soil at the Riksbank, an amount corresponding to 12 percent of the total 125 tonnes.

The bank added that the total value of its gold and its foreign currency reserves amounts to the equivalent of 409 billion kronor.

The gold comes from "earlier historical connections" where banknotes and coins could be exchanged for gold, the bank explained in a statement. It added that the value of gold does not typically follow the pattern of the foreign currency reserves, allowing the bank's total reserves to stay more stable as a result.

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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.

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.

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