Sweden: Financial System Stability Assessment

IMF Staff Country Reports, November 17, 2016

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Sweden: Financial System Stability Assessment

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Bibliographic details

• Published: November 17, 2016
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781475554618.002

Executive summary and scope

• Discusses findings of the Financial System Stability Assessment for Sweden.
• Emphasizes that the Swedish financial system is large and highly interconnected, placing a premium on the accompanying policy framework.
• Notes Sweden’s role as a regional financial hub with complex domestic and international linkages.
• Notes that macrofinancial risks have grown since 2011, including the rising share of highly indebted households.
• Stress tests suggest banks and nonbanks are largely resilient to solvency shocks, but concerns persist about the ability of bank models to capture unexpected losses.

Major findings

• The financial system is among Europe’s largest relative to the size of the domestic economy.
• Complex domestic and international linkages reflect Sweden’s role as a regional financial hub.
• Macrofinancial risks have increased since 2011; example cited: the rising share of highly indebted households.
• Stress testing results:
  • Banks and nonbanks are largely resilient to solvency shocks.
  • Persistent concerns about the ability of bank models to capture unexpected losses.

Policy implications and emphasis

• The size and interconnectedness of the financial system place a premium on a robust policy framework.
• Continued attention to household indebtedness and model risk in banks is warranted given rising macrofinancial vulnerabilities and stress-test caveats.

Subjects and keywords (as listed)

• Subject: Banking, Covered bonds, Financial institutions, Financial sector policy and analysis, Financial sector stability, Housing prices, Insurance, Prices, Stress testing
• Keywords: asset, asset liquidation, assets pro-rata, bank, bank assets, Covered bonds, CR, cross holdings, Europe, Financial sector stability, financial system, foreign currency, Global, household assets, Housing prices, hurdle rate, Insurance, ISCR, return on equity, Stress testing

Content in this bundle

• Sweden: Financial System Stability Assessment; IMF Country Report 16/355; October 26, 2016
  • Sweden: Financial System Stability Assessment; IMF Country Report 16/355; October 26, 2016 (Markdown version)
  • Sweden: Financial System Stability Assessment; IMF Country Report 16/355; October 26, 2016 (PDF)