OREANDA-NEWS. The Governor of the Swedish Riksbank, Stefan Ingves, gave a lecture at the National Bank of Ukraine on "Financial crisis – Lessons learned" with experiences from two financial crises in Sweden to representatives of the National Bank, Presidential Administration of Ukraine, Ministry of Finance, National Commission on Securities and Stock Market, National Commission for state regulation of financial services markets, Deposit Guarantee Fund as well as bankers and industry associations.

The meeting was also attended by representatives of the Embassy of Sweden in Ukraine, World Bank in Ukraine, the International Monetary Fund in Ukraine, the European Bank for Reconstruction and Development in Ukraine.

While introducing Stefan Ingves, the Governor of the National Bank of Ukraine Valeria Gontareva noted that the Riksbank is one of the most active supporters of the Ukrainian financial sector reform; and that technical assistance and the advice of Swedish colleagues is invaluable to the National bank as well as Ukraine.

The Governor of the Riksbank has dealt with two financial crises in Sweden, in the beginning of the 1990s and in 2008-2010. He also has experience from a number of financial crises around the world as an IMF employee.

"In the 1990s the crisis was caused by Swedish banks’ solvency problems and in 2008 - by the international liquidity crisis. Although the origin of the crisis was different, exiting a crisis always has a common basis. The key to successful crisis management is restoring confidence in the banking system", - said Stefan Ingves.

According to him, in order to overcome the crisis in 1990s Sweden achieved political consensus and worked to enhance confidence in the banking system. In addition, The Swedish Bank Support Authority formed a transparent approach to all stakeholders: organizational structure and functional division at the central bank became transparent and clear, there was a common yardstick for all market participants. The authorities involved also had goals and vision for the future structure of the banking system. The work to restructure the banks was carried out together with the owners and mechanisms of supporting them was developed.

The financial crisis of 2008 was the second crisis faced by Sweden, and at that time this small open economy was highly dependent on international capital markets. The global financial crisis that began in the US also caused big problems in the Baltic countries, where Swedish banks were key players. The global financial crisis in combination with the problems in the Baltic Countries caused instability in the entire Swedish banking system.

To alleviate liquidity strains in the Swedish financial sector, the Riksbank introduced a series of new liquidity facilities, both in domestic and foreign currency. The Swedish National Debt Office also increased their auctions of T-bills, and there were also a couple of smaller financial institutions that was given emergency liquidity assistance and later had to be nationalized or restructured.

At the end of his speech, the Governor of the Riksbank concluded with some lessons learned based on the Swedish experience in stabilizing the financial sector:

Triggers and vulnerabilities may differ between the crises in Sweden and Ukraine, but general principles apply

Weak supervision is costly in the long-run

Crisis management: swift action is necessary, things unlikely to improve by themselves

Financial stability often hinges on access to foreign liquidity

Limit domestic banks’ foreign exchange liabilities

Political stability and sustainable fiscal dynamics must complement financial sector reforms.

In addition, Stefan Ingves also met with the Board members of the NBU. From the National bank, the meeting was attended by Governor of the central bank Valeria Gontareva and her deputies Yakiv Smolii, Dmitro Sologub, Kateryna Rozhkova and Oleh Churiy. Central bankers discussed the problems and challenges of Ukraine’s way to cashless economy, new technologies and financial services in the banking sector, as well as the foreign currency market liberalization.