Sweden: Financial Sector Assessment Program Update: Technical Note on Stress Testing of the Banking Sector
IMF Staff Country Reports, September 16, 2011
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Bibliographic details
- Published: September 16, 2011
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781463903596.002
Summary
- Although Sweden has recovered from the financial crisis, authorities have already initiated exit measures from crisis response policies.
- The Financial Sector Assessment Program (FSAP) Update undertook a financial stability analysis of the banking sector, including a comprehensive stress-testing exercise of banks’ solvency and liquidity positions.
- While the banking sector appears resilient to credit risk stress tests, liquidity stress test results reveal some weaknesses owing to its heavy reliance on wholesale funding.
- Swedish bank groups have extensive cross-border activities, mostly in the Scandinavian and Baltic regions.
Key findings from the stress-testing exercise
- Comprehensive stress tests covered both solvency and liquidity positions of banks.
- Credit risk stress tests indicate that the banking sector appears resilient.
- Liquidity stress tests reveal weaknesses attributable to heavy reliance on wholesale funding.
Structural and cross-border considerations
- Swedish bank groups have extensive cross-border activities, mostly in the Scandinavian and Baltic regions.