Transcript 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
20
20
Greece
18
16
14
18
Ireland
Italy
16
Portugal
Spain
14
Sweden
12
12
10
10
8
8
6
6
4
4
2
2
0
jul-08
0
jan-09
jul-09
Ten-year government bond rates, per cent.
jan-10
jul-10
jan-11
jul-11
Weak public finances a problem
Sovereign debt as percentage of GDP
180
180
USA
Greece
Ireland
Italy
Portugal
Spain
160
140
160
140
120
120
100
100
80
80
60
60
40
40
20
20
0
0
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
Source: IMF WEO April 2011
Adjustment programmes and
sovereign debt
EUR billion
Greece
Ireland
Portugal
Funding
through
EU/IMF
programmes
109
85
78
Sovereign
debt (2010)
329
148
160
Sources: IMF
and Eurostat
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

Scope of the adjustment funds
EUR billion
EFSF
EFSM
(European Financial
Stability Facility)
(European Financial
Stabilisation
Mechanism)
Period
Created 2010
Created 2010
2011-2013
2013
Amount
Approx. 250
60
440
500
Euro countries
EU budget
43,7
48,5
*Requires
parliamentary
approval of euro
area countries
** ESM replaces EFSF
and EFSM
Guarantee
Earmarked
for Ireland
and Portugal
Sources: EFSF and
European
Commission
Extended
EFSF*
ESM**
(European
Stability
Mechanism)
Large dependence on foreign marked
funding
The major Swedish banks’ market funding via Swedish parent and subsidiary
companies, SEK billion
3 000
2 500
2 000
1 500
1 000
500
0
98
99
00
01
02
03
04
Foreign Currency
Sources: Statistics Sweden and the Riksbank
05
06
07
SEK
08
09
10
11
12
Expected slowdown in GDP growth
10
10
5
5
0
0
-5
-5
-10
-10
GDP, outcome
-15
-15
GDP, forecast July 2011
Average growth since 1980
-20
-20
04
05
06
07
08
Quarterly changed calculated as an annual change
09
10
11
12
13
14
Sources: Statistics Sweden and the Riksbank
The main task for monetary policy is
the inflation target
Forecasts from the July Monetary Policy Report
5
5
CPI
CPIF
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
00
01
02
Annual percentage change
03
04
05
06
07
08
09
10
11
12
13
14
Sources: Statistics Sweden and the Riksbank
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