Riksbank chief Erik Thedéen warned of the economic consequences of a prolonged Middle East war during a speech in Stockholm on Tuesday. According to Svenska Dagbladet, Thedéen said preparations must be made for the war and its global economic consequences to potentially become both extensive and prolonged. He reportedly pointed out that rising fuel prices will push up CPIF inflation and did not rule out interest rate changes.
In the same speech, covered by Riksbanken Nyheter, Thedéen discussed banking regulations. He reportedly wants banks to more easily use their capital buffers, welcomed the Riksbank taking over responsibility for the countercyclical capital buffer, and intends to keep it at 2 percent. He emphasized that buffers should be useful for banks, noting they are often unwilling to use them during stress to avoid appearing weak.
preparations must be made for the war and its global economic consequences to potentially become both extensive and prolonged
Thedéen also reportedly called for simplifying capital requirement rules without undermining the banking system's resilience, distinguishing between simplification and deregulation. He commented that since the global financial crisis, banks' increased capital has contributed to economic stability, and that only stable, well-capitalized banks continue lending during crises.
rising fuel prices will push up CPIF inflation and did not rule out interest rate changes
buffers should be useful for banks, noting they are often unwilling to use them during stress to avoid appearing weak
since the global financial crisis, banks' increased capital has contributed to economic stability, and that only stable, well-capitalized banks continue lending during crises