{
  "title": "Sweden: Selected Issues",
  "publication": "IMF Staff Country Reports, March 16, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2023/03/16/sweden-selected-issues-530940",
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  "summary": "This Selected Issues paper examines Sweden’s corporate vulnerabilities and focuses on commercial real estate (CRE). Liquidity premia on funding costs will undermine CRE profits and lead to the increase in credit risk premia, amplifying the original shock.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Examines Sweden’s corporate vulnerabilities with a focus on commercial real estate (CRE).\n- Liquidity premia on funding costs will undermine CRE profits and lead to the increase in credit risk premia, amplifying the original shock.\n- Stress tests indicate that CREs face debt servicing pressures even under a mild scenario."
    },
    {
      "heading": "Findings on CRE vulnerabilities and stress testing",
      "content": "- Liquidity premia on funding costs undermine CRE profits.\n- Increase in credit risk premia amplifies the original shock.\n- Stress tests show debt servicing pressures for CREs even under a mild scenario."
    },
    {
      "heading": "Disclosure and bond issuance",
      "content": "- The supervisory authorities and, potentially, the Securities Market Association should encourage better disclosure.\n- The bond issuance template should include disclosure on liabilities, especially those in foreign currency, and contingency plans when market funding dries up."
    },
    {
      "heading": "Policy recommendations and preparedness",
      "content": "- Authorities should evaluate the need to raise capital requirements for banks for CRE exposures.\n- Authorities should plan now for what a potential crisis intervention might be.\n  - Such intervention should be designed to limit moral hazard.\n  - Plans to restore market functioning should aim to incentivize participants to re-enter the market, while considering the costs and risks to the central bank and concerns about moral hazard.\n\n---\n\n Content in this bundle\n\n- Sweden: Selected Issues; IMF Country Report No. 23/112; February 24, 2023\n  - Sweden: Selected Issues; IMF Country Report No. 23/112; February 24, 2023 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sweden: Selected Issues; IMF Country Report No. 23/112; February 24, 2023 (PDF){rel=\"external\" type=\"application/pdf\"}"
    }
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    "[Markdown version](/en/publications/cr/issues/2023/03/16/sweden-selected-issues-530940/index.md)",
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    "Published: March 16, 2023",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400237522.002",
    "Examines Sweden’s corporate vulnerabilities with a focus on commercial real estate (CRE).",
    "Liquidity premia on funding costs will undermine CRE profits and lead to the increase in credit risk premia, amplifying the original shock.",
    "Stress tests indicate that CREs face debt servicing pressures even under a mild scenario.",
    "Liquidity premia on funding costs undermine CRE profits.",
    "Increase in credit risk premia amplifies the original shock.",
    "Stress tests show debt servicing pressures for CREs even under a mild scenario.",
    "The supervisory authorities and, potentially, the Securities Market Association should encourage better disclosure.",
    "The bond issuance template should include disclosure on liabilities, especially those in foreign currency, and contingency plans when market funding dries up.",
    "Authorities should evaluate the need to raise capital requirements for banks for CRE exposures.",
    "Authorities should plan now for what a potential crisis intervention might be.",
    "**Sweden: Selected Issues; IMF Country Report No. 23/112; February 24, 2023**"
  ],
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      "title": "Sweden: Selected Issues; IMF Country Report No. 23/112; February 24, 2023",
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