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Extra meeting of the Riksdag Committee on Finance 16 August 2011

Extra meeting of the Riksdag Committee on Finance 16 August 2011. Stefan Ingves. Rising long interest rates for countries with sovereign debt problems. Ten-year government bond rates, per cent. Weak public finances a problem Sovereign debt as percentage of GDP. Source: IMF WEO April 2011.

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Extra meeting of the Riksdag Committee on Finance 16 August 2011

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  1. Extra meeting of the Riksdag Committee on Finance16 August 2011 Stefan Ingves

  2. Rising long interest rates for countries with sovereign debt problems Ten-year government bond rates, per cent.

  3. Weak public finances a problem Sovereign debt as percentage of GDP Source: IMF WEO April 2011

  4. Adjustment programmes and sovereign debtEUR billion

  5. Some international events during the summer • EMU: EFSF extended and empowered to buy government bonds on secondary market • EMU: Cut interest rates on official loans to countries with support programmes • EMU: Incentives for holders of Greek government bonds to exchange them for new ones with longer maturities • EMU: ECB begins to buy Italian and Spanish government bonds • EMU: New savings measures announced in Italy and Spain • USA: Public debt ceiling raised. Savings of USD 2400 billion over the coming 10 years. • USA: Standard & Poor downgraded US credit rating

  6. Scope of the adjustment fundsEUR billion

  7. Large dependence on foreign marked fundingThe major Swedish banks’ market funding via Swedish parent and subsidiary companies, SEK billion Sources: Statistics Sweden and the Riksbank

  8. Expected slowdown in GDP growth Quarterly changed calculated as an annual change Sources: Statistics Sweden and the Riksbank

  9. The main task for monetary policy is the inflation targetForecasts from the July Monetary Policy Report Annual percentage change Sources: Statistics Sweden and the Riksbank

  10. Summary • Swedish banks are well capitalised, and at present have no funding problems • The Riksbank is ready and able to take action if required • Statistics received so far are roughly in line with the most recent assessments of the Swedish economy, but prospects abroad look weaker • The Riksbank will publish a new interest rate decision and new assessments on 7 September

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