Swedish central bank proposes $4.05b capital injection

The Swedish central bank, Riksbank proposed on Tuesday a capital injection of 43.7 billion Swedish crowns ($4.05 billion) to the country’s parliament. This move aims to restore the bank’s equity to the statutory base level.

Riksbank Governor Erik Thedeen reassured that the bank’s negative equity does not impact its short-term monetary policy; however, he emphasised the necessity of financial independence for the bank to maintain long-term confidence in its independent monetary policy.

In 2022, Riksbank suffered a loss of approximately 80 billion crowns, leading to a negative equity of 18 billion crowns. This was primarily due to a significant rise in interest rates, which resulted in a decrease in the value of bonds purchased by the bank from 2015 to 2021.

According to new legislation introduced in 2023, Riksbank’s equity should aim for a target level of 60 billion crowns and a basic level of around 40 billion crowns. Despite this, Riksbank reported its equity at the end of 2023 to be around minus 2 billion crowns.