July 30, 2018 / 2:20 PM / a year ago

Sweden's FSA proposes higher countercyclical buffer from Sept 2019

STOCKHOLM, July 30 (Reuters) - Sweden’s financial watchdog on Monday proposed to raise its countercyclical buffer rate to 2.5 percent from 2.0 percent in September 2019 to increase the resilience of the Swedish banking sector.

The countercyclical buffer rate has been raised twice since its introduction in September 2015 when it stood at 1 percent.

“A higher buffer improves the financial system’s capacity to withstand shocks,” Finansinspektionen (FI) said in a statement.

“Since the last increase, systemic risks associated with lending and risk taking have continued to increase. FI therefore proposes to further raise the buffer rate,” it said.

A decision will be taken by the watchdog’s board of directors in September, an FI spokesman said.

Reporting by Olof Swahnberg, editing by Anna Ringstrom and Adrian Croft

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