Sweden: Financial Sector Assessment Program–Technical Note on Basel Core Principles for Effective Banking Supervision

IMF Staff Country Reports, April 20, 2023

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Canonical URL: Sweden: Financial Sector Assessment Program–Technical Note on Basel Core Principles for Effective Banking Supervision

Technical note on Basel Core Principles (BCP) for Effective Banking Supervision for the Sweden financial sector assessment program.
Focuses on the legal and supervisory framework for banks and banking supervision in Sweden and recent regulatory reforms.

The authorities have adopted a number of regulatory reforms to enhance the resilience of the Swedish financial system.
The key changes to the legal framework for banks and banking supervision in Sweden have mainly been a direct result of legal initiatives at European Union level.
The supervisory framework for banks and its implementation in Sweden is broadly in line with a number of the BCP essential criteria.
Most of the shortcomings that have been identified are attributable to gaps in the legal or regulatory frameworks and to significant resource constraints within the banking supervision function at Financial Supervisory Authority (FI).
Sweden has a relatively efficient supervisory framework that has evolved over the years, but which requires enhancements to align with best practice.
FI’s supervision follows a risk-based approach, where most of its resources are devoted to the largest institutions and significant branches in Sweden.
The principle of disclosure and transparency is well established in the Swedish context.

Several gaps should be addressed to enhance the effectiveness of banking supervision in Sweden and to contribute toward ensuring a safe financial system.
Shortcomings are linked to:
- Gaps in the legal or regulatory frameworks.
- Significant resource constraints within the banking supervision function at FI.

Address gaps in the legal and regulatory frameworks to better align with BCP essential criteria.
Strengthen resource capacity within the banking supervision function at FI to improve supervisory effectiveness.
Enhance supervisory practices to align with best practice while maintaining the established principle of disclosure and transparency.
Continue to prioritize a risk-based approach, with adequate allocation of resources to the largest institutions and significant branches in Sweden.

Source: Sweden: Financial Sector Assessment Program–Technical Note on Basel Core Principles for Effective Banking Supervision, April 20, 2023.