Sweden shows confidence in Icelandic banks

Icelandic banksThe Swedish government minister for financial markets, Mats Odell, said last Friday that there are no problems with liquidity at the major Icelandic banks. His comments come on the back of the recent loan facility offered to Iceland by the central banks of Denmark, Norway and Sweden.

“We have not seen any problems with liquidity when it comes to Icelandic banks,” Odell told a financial conference. “Neither have we (…) discussed the Icelandic banks and their possible problems on a governmental level,” he continued.

The Icelandic central bank has said that the EUR 1.5 billion loan offered by the Nordic central banks was largely a symbolic way of showing confidence in the Icelandic economy, while giving the country concrete proof that it has the means to bail out its commercial banks, should they need it.

The Icelandic Central Bank and the commercial banks have, however, repeatedly stressed that they do not intend to actually use the money, as the banks believe they already have sufficient liquidity to weather the credit crunch.

The minister’s comments were welcomed in Reykjavik as a further sign of a positive shift in Iceland’s financial standing on global markets. Odell’s opinions echo those recently expressed by the Financial Times, the Wall Street Journal, Bear Stearns Bank and Arni Matthiesen, the Icelandic finance minister.