(Adds financial markets minister comment)
STOCKHOLM, June 13 A Swedish government proposal
to reduce the size of the country's currency reserves may
violate EU regulations and encroach on the independence of the
central bank, Riksbank Governor Stefan Ingves said on Tuesday.
The centre-left government proposed in March reducing the
central bank's foreign currency reserves by around 200 billion
crowns ($23 billion) and use the money to pay off the country's
Several Riksbank board members have spoken out against the
minority government's plan, saying it could leave insufficient
buffers to deal with a future financial crisis and pose risks to
Ingves, who is expected to step down at the turn of the year
after more than a decade as Riksbank chief, slammed the plans
again in a parliament hearing on Tuesday and also raised the
issue of whether the proposal is in line with EU law.
"As far as I can judge, it is designed in such a way that it
violates EU regulations, it encroaches on the independence of
the Riksbank and it makes it harder for us to handle financial
stability," he said in a parliament hearing.
"All in all, this is not a well thought through proposal."
Financial Markets Minister Per Bolund told reporters after
the hearing that the government disagreed with the view the
proposal would breach EU law and that it would never put
something forward that contravenes current legislation.
"Our analysis shows it is very much in line with EU law,"
Bolund said. "We have made thorough analyses and we have
extensive legal expertise within the government."
The Riksbank boosted its currency reserves after the
2008-2009 crisis to enable it to provide emergency liquidity for
Sweden's outsized banking system, which has assets of around
four times the country's gross domestic product.
Under the government's plans, the debt office would be
tasked with raising foreign reserves if needed in case of a
"That creates two currency reserves, one at the debt office
and one at the Riksbank, which de facto creates two central
banks in Sweden," Ingves said.
"And the way I see it, that is one too many."
($1 = 8.7033 Swedish crowns)
(Reporting by Johan Ahlander and Johan Sennero; Writing by
Niklas Pollard and Daniel Dickson; Editing by Hugh Lawson)