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stockholmer's Journal
Posted by stockholmer in General Discussion
Sat Dec 03rd 2011, 05:46 PM
http://www.bloomberg.com/news/2011-12-02/s...

Sweden is enjoying its lowest borrowing cost ever relative to Germany as investors reward the biggest Scandinavian economy for cutting its debt to less than half Europe’s average and enforcing discipline at its banks. “Everybody is basically fleeing the euro area, not Europe,” said Georg Andersen, the managing director of the banking unit of Nykredit A/S in Copenhagen, Europe’s biggest issuer of mortgage-backed covered debt. “The Nordic area stands out as a safe haven.”

Almost two decades after resolving its last banking crisis, Sweden boasts the world’s best-performing bond market. The country, which opted to stay outside the euro, has paid down its debts and imposed stricter controls on its lenders. Sweden’s government made a profit on its 2008 financial rescue, will post a budget surplus this year and pays less than any other European Union member to borrow for 10 years.

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Sweden’s success lies in part in its focus on income equality, Swedish Prime Minister Fredrik Reinfeldt said in an interview last month. Sweden has the world’s highest tax burden as a percentage of gross domestic product after Denmark. The two countries also boast some of the most equal income distributions in the world, according to the Organization for Economic Cooperation and Development.

Sweden’s financial regulator will require the country’s biggest banks to target capital buffers of at least 10 percent of their risk-weighted assets by 2013, with the ratio rising to 12 percent two years later. The Basel Committee on Banking Supervision sets a minimum target of 7 percent by 2019. Sweden’s government says the more rigorous capital standards are necessary to protect taxpayers from potential losses.


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