UPDATE 2-Sweden's central bank trims forex reserve after Nordea moves to Finland

(Adds crown reaction, analyst comment)

STOCKHOLM, March 6 (Reuters) - Sweden’s central bank will allow its gold and forex reserve to shrink as its contingency need for foreign currency has decreased, it said on Wednesday.

The Riksbank will cut the reserves by $8 billion to $48 billion by not refinancing currency loans maturing in May, July and October, it said in a statement.

It cited changes in banks’ balance sheets and last year’s move to Finland from Sweden by the Nordic region’s biggest bank, Nordea.

“The allocation of responsibility between the Riksbank and the ECB or the Bank of Finland in the event of a crisis has changed,” it said.

The Riksbank also said it had upgraded the gold reserve so that it could be converted into liquid funds at short notice.

It said it also set a higher bar on the cost of Emergency Liquidity Assistance loans to banks in crisis. “The interest rate on such a loan will be set higher than the rate at which comparable banks can borrow on the market,” it said.

The Swedish crown strengthened against the euro after the news.

“This statement could on the margin be a positive factor for the krona from a credibility perspective (the Riksbank seems to (be) less concerned about Swedish banks’ short term funding in foreign currencies and the government debt will decline by corresponding $8 billion),” analysts at bank SEB said in a note. (Reporting by Anna Ringstrom; editing by Niklas Pollard and John Stonestreet)