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Joint approach regarding liquidity support in bank resolution
News 2 June 2025
The Swedish National Debt Office and the Riksbank have developed a joint approach to liquidity support for banks in resolution. The aim is to make it clearer to market participants how the liquidity supply of a bank in resolution can be secured.
The Debt Office and the Riksbank both play important roles in safeguarding financial stability and will cooperate closely and constructively with each other in the event that a bank is put into resolution. It would be very costly for the economy if a systemically important bank were allowed to fail. The Swedish National Debt Office can therefore take control (but not take over ownership) of a failing systemically important bank and then restructure or transfer the business in an orderly manner. This procedure, known as resolution, restores the bank's viability.
A necessary condition for the successful restructuring of a bank in resolution is that the bank is able to fund itself. The basic principle of the resolution procedure is that the bank's owners and lenders – not the taxpayers – continue to finance the bank. However, during a transitional phase, a bank in resolution may find it difficult to obtain sufficient liquidity on its own and may therefore need temporary liquidity support. Both the Debt Office and the Riksbank are authorised to grant such support. The Debt Office and the Riksbank have developed a joint approach to liquidity support for banks in resolution, which aims to make it clearer to market participants how the liquidity supply for a bank in resolution can be secured.
"If a systemically important bank needs to be placed in resolution, both the Swedish National Debt Office and the Riksbank are ready to quickly take the measures required to maintain financial stability. Our joint approach to ensuring liquidity in resolution further strengthens this preparedness,” says Karolina Ekholm, Director General of the Swedish National Debt Office.
“The Riksbank and the Swedish National Debt Office are prepared to act and cooperate in a crisis. Liquidity provision is central to successful crisis management. It is therefore positive for financial stability that we have developed an approach to provide liquidity to banks in resolution,” says Riksbank Governor Erik Thedéen.