Archive for October 21st, 2008

Sweden’s rescue plan

October 21, 2008

I had posted about lessons from Sweden’s Banking crisis of 1992. However, the crisis has engulfed Sweden banking system as well. The linkage is less via the financial channel as in the case of India and others but via an indirect trade channel.

Basically Sweden Banks have lent big time to Baltic region. Baltic region  has grown previously on account of its exports to European developed countries. Now with European developed countries in near recession, the Baltic region has slowed. This is expected to increase non-performing assets in Sweden Banks’ books and concerns over Sweden’s Banking system. 

The result is a plan by Sweden Finance Ministry to support its banks.  It is a combination of capital injection, guarantee scheme and stabilisation fund.

Tough times for any economic policymaker. The channels can effect you from anywhere. What do you do?

Assorted Links

October 21, 2008

1. TTR pointsto Montek quotes. Frankly I never understood the rationale for so many committees on fin sector. The one on Mumbai as an International Finance Centre (MIFC) was just too ambitious and wanting. He also points to UK’s industrial policy!

2. WSJ Blog points to Fedspeak – Bernanke, Krozner. It updates on the IMF scandal

3. Rodrik on fin innovation

4. Fin Prof points Fama wins the inaugural Onassis Prize

5. GCB points to a Michael Spence article who points how the crisis could lead to growth

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