(Adds bank shares in sixth paragraph.)
Dec. 1 (Bloomberg) -- The Riksbank has no need to set up a new dollar swap line with the U.S. Federal Reserve because Swedish banks have access to dollar market funding, Deputy Governor Barbro Wickman-Parak said.
“We have constant contact with the market and know what’s happening and the banks have access to the kind of financing they need, including dollar financing, and we then don’t need to do anything” at the moment, she said today in an interview in Stockholm.
The Riksbank has warned that Swedish lenders rely too much on short-term dollar funding, and earlier this week said that the lenders remain vulnerable to liquidity risk. Banks in other parts of Europe have had difficulties accessing dollars and it was “good” that the European Central Bank took part in yesterday’s coordinated action with the Fed to provide dollar liquidity to the continent’s banks, she said.
Stocks rallied worldwide, commodities rose and yields on most European debt fell yesterday after the Fed, ECB and four other central banks cut the cost of and extended emergency dollar loans to banks outside the U.S. Sweden’s dollar swap-line with the Fed expired in February 2010.
“European banks are in a difficult situation. They are dependent on dollar financing,” Wickman-Parak said. “All that eases the stress on the market is good.”
Shares in the four largest Swedish banks fell today, after surging yesterday. Shares in Nordea Bank AB, the Nordic region’s largest bank, fell 0.9 percent, after rallying almost 6 percent yesterday. SEB AB fell 0.8 percent, Svenska Handelsbanken AB dropped 0.1 percent, and Swedbank AB slid 0.5 percent.
The 46-member Bloomberg index of European financials rose 0.2 percent as of 1:57 p.m. in Stockholm.
The central banks acted after financing costs rose following euro-area leaders’ failure to bolster the region’s rescue fund as planned. A crisis that began in Greece two years ago has moved to the euro-area’s core and leaders are struggling to convince investors they can contain the risk and assure the euro’s survival.
Sweden has emerged as a haven from the deepening European debt crisis. The Riksbank said on Nov. 29 that while the country’s lenders are “well capitalized” it also warned “liquidity risks are still higher than in many other European banks,” in a twice yearly financial stability report.
--Editors: Jonas Bergman, Tasneem Brogger
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