(Adds Finance Minister quote, background, detail)
STOCKHOLM May 23 Sweden's banks should have
bigger buffers than currently proposed with which to withstand
any future financial crisis, the head of the central bank said
on Friday, underlining divisions among Swedish authorities over
Sweden has introduced a raft of legislation to beef up banks
core capital buffers and strengthen the country's financial
system in recent years and its regime is already among the
strictest in Europe.
Earlier this week, Sweden's Financial Supervisory Authority
said a 1 percent countercyclical buffer for banks should
introduced from summer 2015.
But central bank Governor Stefan Ingves said banks should
set aside more capital.
"I think it should be set at 2.5 (percent), because we are
carrying a burden as a result of the fact that debts have risen
very quickly for such a long period and we can't get away from
that fact," he told reporters after a meeting of the country's
"I think we should do this as quickly as possible."
Ingves' statement highlights divisions among top Swedish
policymakers over the counter-cyclical buffer, which will take
core capital to an average of 16 percent of risk weighted assets
in Sweden, much higher than in most of Europe.
Ingves is among policy-makers who are worried that levels of
household debt in Sweden - among the highest in Europe at over
170 percent of disposable income - are a threat to financial
A recent report by the central bank said that figure may
underestimate the scale of the problem.
Sweden's Debt Office has concerns about the introduction of
a countercyclical buffer next year, fearing the burden may come
too soon for an economy that has yet to fully recover from the
Sweden has already taken a number of steps to boost bank
capital and cool the housing market and Debt Office head Hans
Lindblad said further analysis was needed before more regulatory
measures were taken.
Announcing its plan for a 1 percent countercyclical buffer
earlier this week, the FSA said that the planned introduction of
higher mortgage risk weights, which will rise to 25 percent from
15 percent later this year, offset the need for a higher
The government supports the FSA's 1 percent proposal and
Markets Minister Peter Norman played down any disagreement over
the measure as marginal.
"My assessment is that we have a very similar picture of
reality," he told reporters after the meeting of the stability
council, which includes the government, the Debt Office, the FSA
and the central bank.
(Reporting by Johan Ahlander, Daniel Dickson, Simon Johnson and
Johan Sennero; Editing by Alistair Scrutton)