Sweden's Guarantee Scheme (Sweden GFC)

16 Pages Posted: 27 Oct 2020 Last revised: 27 Aug 2021

See all articles by Lily Engbith

Lily Engbith

Yale School of Management - Program on Financial Stability

Kevin Kiernan

Yale University - Yale Program on Financial Stability

Date Written: October 10, 2020

Abstract

Although Sweden was not as directly impacted by the Global Financial Crisis as some other economies, Lehman Brothers’ bankruptcy on September 15, 2008, prompted Swedish authorities to take preemptive measures to protect domestic banks and financial institutions. One such program, announced on October 20, 2008, and implemented on October 29, 2008, was designed to preserve credit extension to businesses and households through what became known as the Swedish Guarantee Scheme. Per the terms of the Scheme, new short- and medium-term debt of maturities ranging from 90 days to five years issued by eligible banks would be guaranteed by the Swedish government in exchange for a fee based on the maturity of the guaranteed debt and the risk profile of the issuing institution. The Scheme would be funded by a more general stabilization fund and initially capped at a maximum of SEK 1500 billion ($195.1 billion). Peak utilization reached SEK 354 billion in 2009. None of the six participating institutions experienced defaults. The issuance window for the program expired on June 30, 2011, and all outstanding debt had matured by May 13, 2015.

Keywords: Sweden, medium-term debt, government guarantee

JEL Classification: G01,G28

Suggested Citation

Engbith, Lily and Kiernan, Kevin, Sweden's Guarantee Scheme (Sweden GFC) (October 10, 2020). The Journal of Financial Crises: Vol. 2 : Iss. 3, 911-926. , Available at SSRN: https://ssrn.com/abstract=3718012

Lily Engbith (Contact Author)

Yale School of Management - Program on Financial Stability ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

Kevin Kiernan

Yale University - Yale Program on Financial Stability

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States

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