Swedish c.banker-crisis shows need of FX reserve - News

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Swedish c.banker-crisis shows need of FX reserve

By: AFX | 16 Nov 2009 | 05:36 AM ET

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VIENNA, Nov 16 (Reuters) - The experience of the global financial crisis has underlined the need for Sweden to have foreign exchange reserves, despite having a floating currency, a Swedish central banker said on Monday. "Before the crisis we didn't really believe we needed a foreign exchange reserve because we had a floating currency," Swedish Deputy Central Bank Governor Karolina Ekholm said at a conference in the Austrian capital. "But I think we have now actually concluded that we do need some foreign exchange (reserves) because we could end up in a situation where we need to provide liquidity in foreign currencies for our banks." The financial crisis saw liquidity dry up for financial institutions across the world, prompting the Riksbank, as well as a string of other central banks, to step in to fill the gap. The Swedish central bank has provided billions of crowns worth of loans to the Nordic country's banks, some in U.S. dollars facilitated through swap agreements with the Federal Reserve. "What we are concerned about is if there is another type of crisis, a local crisis that involves perhaps our region ... that there is not a situation were a swap agreement can be had overnight. Then it could create some problems for us," Ekholm said. Keywords: SWEDEN CBANK/ (Via Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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