EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 24 October 2008 
at the request of the Swedish Ministry of Finance 
on a draft proposal on stabilising meas ures for the Swedish financial system 
(CON/2008/59) 
 Introduction and legal basis
 
On 20 October 2008 the European Central Bank (ECB) received a request from the Swedish Ministry of 
Finance for an opinion on a draft proposal on stab ilising measures for the Swedish financial system 
(hereinafter the ‘draft law’). 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and on the sixth indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions
1, as the draft law relates to rules applicable  to financial institutions insofar as they 
materially influence the stability of financial ins titutions and markets. In accordance with the first 
sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council 
has adopted this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law is aimed at securing financial stab ility in Sweden and restoring confidence in the 
markets. To this end, the draft law provid es a general legal framework allowing for the 
establishment of: (i) a Governmental body responsible for administering any support provided under the draft law (hereinafter the ‘support author ity’); (ii) a stability fund to finance the support 
measures and the administration of the support aut hority (hereinafter the ‘stability fund’); and 
(iii) an appeal board with the authority to revi ew decisions on the conditions that are applied in 
relation to support provided to credit institutions (hereinafter the ‘appeal board’). Under the draft 
law, the support authority is given a broad ma ndate to manage problems associated with 
insufficient liquidity and potential future solven cy problems, while making sure that the Swedish 
taxpayers are not responsible for bearing the cost s of any future measures. The draft law enables 
the exercise of a wide variety of appropriate stability measures, including, inter alia , the issuance 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 of State guarantees, capital injections and compulsory share redemptions2. Credit institutions can 
decide whether they will make use of the supp ort that may be provided under the draft law. 
Participation will be based on contractual agre ements between the support authority, which is 
currently the National Debt Office, and th e credit institutions receiving the support3. In specified 
cases, the State will also have right to redeem shares  held in a credit institution, if this is justified 
by public interest4. The Government or the support authorit y will be responsible for administering 
the guarantee scheme, with the support authority managing and, if necessary, crediting the stability 
fund in order to finance the support measures5. 
1.2 The Financial Supervisory Authority has been assi gned the task of monitoring the situation in order 
to ascertain whether the benefits arising from the draft law are also passed on to households and 
businesses.  
 2. General observations 
2.1 The Government submitted the draft law to th e Council of Legislation on 20 October 2008; the 
ECB was consulted on the same day. The draft la w will come into effect immediately after a 
review by the Council of Legisla tion and approval by the Parliament . The Government expects this 
to occur during the week starting 27 October 2008.  
2.2 As already mentioned in recent ECB opinions on draft national laws in other Member States 
relating to emergency measures arising out of the current financial turmoil
6, it is important for 
national authorities to coordinate their responses to  the current financial situation with their EU 
partners. Given the similarities of the causes and consequences of the financial crisis across 
Member States and the potential interdependenc ies of policy responses, the ECB notes that 
coordination is already taking place at the interna tional and European level to preserve confidence 
and financial stability. More specifically, the ECB re fers to the conclusions adopted at the Ecofin 
meeting on 7 October 2008, which highlighted co mmon principles to guide the action of Member 
States as follows: (i) interventions should be timely and the support should in principle be 
temporary; (ii) the interests of taxpayers should be  protected; (iii) existing shareholders should bear 
the due consequences of the intervention; (iv) the government should be in a position to bring about 
a change of management; (v) mana gement should not retain undue benefits; (vi) governments may 
have, inter alia , the power to intervene in remuneration; (v ii) the legitimate interest of competitors 
must be protected, in particular through the St ate aid rules; and (viii) negative spill-over effects 
                                                 
2  See the first sentence of Chapter 1, Section 2 of the draft law.  
3  See Chapter 1, Section 4 of the draft law.  
4  See Chapter 4, Section 1 of the draft law. The conditions under which redemption of the shares is possible include the 
following: (i) the company or the shareholder has not ac cepted the proposed agreemen t whose terms are not found 
unreasonable by the specially established Appeals Board; (ii) the company or the shareholder do not comply with the 
conditions of an agreement; and (iii) the company’s capital base falls below the specified limit. 
5  See Chapter 1, Section 3 and Chapter 7 of the draft law.  
6  See, e.g., ECB Opinion CON/2008/44 of 3 Oc tober 2008 at the request of the Irish Minister for Finance on a draft Credit 
Institutions (Financial Support) Bill 2008. 
3 should be avoided7. Against this background, the ECB is pleased to note that the draft law closely 
follows these conclusions. 
2.3 On 12 October 2008, the Heads of States of the euro area issued a ‘Decl aration on a concerted 
European action plan of the euro area countries’ (hereinafter the ‘Declaration’)8, in which they 
confirmed their commitment to act together in a decisive and comprehensive way in order to 
restore confidence and the proper functioning of the financial system, aiming at restoring appropriate and efficient financ ing conditions for the economy. They agreed on common principles 
to be followed by the EU and euro area governme nts, central banks and supervisors to avoid 
national measures adversely affecti ng the functioning of the single market and the other Member 
States. Such coordinated approach includes initia tives aimed at: (i) ensuring appropriate liquidity; 
(ii) facilitating the funding of banks through va rious means; (iii) providing additional capital 
resources to financial institutions; and (iv) r ecapitalisation of distressed banks. These principles 
were also endorsed by the European Council on 16 October 2008 for all Member States. Against this background, the ECB highlights that all th e initiatives put in place by national governments to 
restore confidence in financial markets should be  aimed at implementing such common principles, 
in the spirit of close cooperation with other Member States and EU institutions. 
2.4 In line with the Declaration, there is a need for coordination in order to avoid significant 
differences in national implementation from ha ving a counter-productive effect and creating 
distortions in global banking markets. In partic ular, the ECB stresses that uncoordinated decisions 
related to state guarantee schemes in some Member  States should be avoided as they may involve a 
fragmentation of money markets within the EU. Moreover, the ECB notes that the draft law 
provides a general legal framework enabling th e Government to provide support to credit 
institutions, in the form deemed appropriate depending on each credit institution’s situation, 
through an agreement between the support authority and the credit institution concerned. The draft 
law provides that the terms and conditions of such  agreements are to be drafted according to the 
following principles: (i) the receiving institution and its owners will be the first to bear any loss 
which arises; (ii) the support should be grante d under normal market conditions to prevent any 
distortion of competition; and (iii) the cost to the state should be as low as possible. The ECB notes that these principles, as set out in the draft law, are broadly in line with the common principles 
adopted at the Ecofin meeting on 7 October 2008 an d highlights that the various forms of support 
which may eventually be granted in the future wi ll have to be consistent with the principles 
enshrined in the Declaration. 
2.5 The ECB also wishes to draw the consulting author ity’s attention to the recent ECB opinions issued 
at the request of other Member States, where the ECB has commented on legislative proposals 
                                                 
7  See the press release of the 2894th Council meeting (13784/08), avai lable on the Council’s website, 
www.consilium.europa.eu. 
8  The Declaration is available on the French Presidency’s website at www.ue2008.fr. 
4 sharing some of the features of the draft law9. It is the ECB’s intention to facilitate coordination of 
the various national efforts addressing the current financial situation, inter alia , through the timely 
adoption and publication of ECB opinions on such draft national legislation. 
 3. Specific comments 3.1  Conditions of support  
 The ECB acknowledges that the draft law is ai med at ensuring that sound business practices are 
followed by the supported credit institutions, that  support is provided insofar as possible in a 
commercial way, with the supported credit instituti on and its owners being the first to bear any 
losses and that the State is protected against undue liabilities
10. The ECB further notes that the 
share redemption mechanism provided for under the dr aft law allows the State to intervene using 
direct administrative powers in cases where proposed or contractually agreed measures with credit institutions are not effective in ensuri ng the financial soundness of an institution
11. The ECB 
considers that such measures, applied in a non- discriminatory and proportional manner, are in 
accordance with the principles of the Declaration, in particular the need  to ensure that the 
shareholders and management of the credit institu tion bear the conseque nces of any intervention12. 
3.2 Prohibition on monetary financing   
 The ECB welcomes the stabilising measures, wh ich are structured to encourage the Swedish 
financial sector to take an active and responsible role in ensuring fi nancial stability. In line with its 
                                                 
9  See ECB Opinion CON/2008/44 of 3 October 2008 at the request of the Irish Minister for Finance on a draft Credit 
Institutions (Financial Support) Bill 2008, ECB Opinion C ON/2008/46 of 8 October 2008 at th e request of the Belgian 
Ministry of Finance on a preliminary draft law on measures promoting financial stability a nd in particular establishing a 
State guarantee for the provision of credit in the c ontext of financial stability, ECB Opinion CON/2008/48 of 
15 October 2008 at the request of the Irish  Minister for Finance on a draft Credit Institutions (Financial Support) Scheme 
2008, ECB Opinion CON/2008/50 of 17 October 2008 at the request of the Belgian Ministry of Finance on a draft royal 
decree adopted under Article 117bis of the Law of 2 August 2002 on the supervision of the financial sector and on 
financial services; ECB Opinion CON/2008/ 51 at the request of the Greek Ministry of Economy and Finance on a draft 
law on, inter alia , the establishment of the ‘Depos itors and Investors of Credit Institutions Compensation Fund’; ECB 
Opinion CON/2008/52 of 17 October 2008 at th e request of the Spanish State Secr etary for Economic Affairs on a Royal 
Decree-Law creating a Fund for the acquisitio n of financial assets and on a Royal Decree-Law adopting urgent financial 
and economic measures in relation to the concerted European action plan of  the euro area countries; ECB Opinion 
CON/2008/54 of 17 October 2008 at the request of the Danish Ministry of Economic and Bu siness Affairs on a proposed 
Law on financial stability; ECB Opinion CON/2008/55 of 20 Oc tober 2008 at the request of the Austrian Ministry of 
Finance on draft legal measures to ensure the stability of  the Austrian financial market; ECB Opinion CON/2008/56 of 
21 October 2008 at the request of the Banque de France on a draft amending finance law for the financing of the 
economy; ECB Opinion CON/2008/57 of 21 October 2008 at the re quest of the German Ministry of Finance on a Law on 
the implementation of a package of measures to stabilise the financial market and an order on its implementation; and 
ECB Opinion CON/2008/58 of 23 October 2008 at the request of th e Banca d’Italia on behalf of  the Italian Ministry for 
Economic Affairs and Finance on two Decr ee-Laws containing urgent measures to guarantee the stability of the banking 
system and the continuity of the provision of credit. All ECB opinions are available on the ECB’s website at 
www.ecb.europa.eu. 
10  See the third sentence of Chapter 1, Section 2, the first sentence of Chapter 2, Section 2 and the fifth sentence of 
Chapter 2, Section 2, toge ther with Chapter 3, Section 3 of the draft law. 
11  See Chapters 4 and 5 of the draft law. 
12  See, e.g., paragraph 3.5 of ECB Op inion CON/2008/53, paragraph 3.3 of E CB Opinion CON/2008/56 and paragraph 3.5 
of  ECB Opinion CON/2008/57. 
5 previous opinions13, the ECB reiterates that it is important that the implemented measures comply 
with the Treaty provisions on the prohibition of mone tary financing. In particular, the draft law will 
lead to the establishment of a stability fund, whic h would qualify as a ‘public undertaking’ within 
the meaning of Article 101(1) of the Treaty. Although the draft law does not address the possible role of Sveriges Riksbank in this context, the ECB would remind the Swedish authorities that a 
number of elements must be observed with regard to the stability fund in order to comply with the 
monetary financing prohibition laid down in the Treaty. First, the stability fund should not be 
allowed to benefit from any type of lending or overdraft facilities from Sveriges Riksbank. Second, 
should the stability fund issue debt instruments in  the future, the ECB considers it important to 
point out that central banks of the European System of Central Banks would be prohibited from purchasing such debt instruments directly from th e stability fund. Third, in case Sveriges Riksbank 
performs any activities for the benefit of the st ability fund, these activities would also need to 
comply with the monetary financing prohibition as regards the remuneration of such activities. 
3.3 Community rules on State aid and financial services  
 Finally, it should be ensured that the beneficiar y institution(s) will not be unfairly advantaged by 
making undue use of their guaranteed status
14. In this context, the ECB draws the consulting 
authority’s attention to the Commission’s recently  adopted guidance on compliance by the financial 
sector support schemes with EU State aid rules15, particularly since the state guarantee of interbank 
deposits is considered an option, and which incl udes in the specific context of the provision of 
State guarantees, detailed rules on setting eligib ility criteria for the beneficiary institutions16. 
Further, in line with its previous opinions17, the ECB reiterates the importance of ensuring that the 
proposed arrangements will be im plemented in full compliance with the relevant Community law 
provisions, including EU financial services legi slation and the single market principles. 
 
                                                 
13  See, e.g., paragraph 3.3 of ECB Opinion CON/2008/52, paragraph 3.1 of E CB Opinion CON/2008/56 and paragraph 3.1 
of ECB Opinion CON/2008/57. 
14  See, e.g., paragraph 3.4 of ECB Op inion CON/2008/48, paragraph 3.1 of E CB Opinion CON/2008/50 and paragraph 3.4 
of ECB Opinion CON/2008/57. 
15  See the ‘Communication from the Commission – The applicatio n of State aid rules to measures taken in relation to 
financial institutions in the context of the current gl obal financial crisis’ of 13 October 2008, available on the 
Commission’s website at www.ec.europa.eu (h ereinafter the ‘Commi ssion’s guidance’). 
16  See paragraph 18 of the Commission’s guidance, specifying that  ‘The eligibility criteria of financial institutions … must 
be objective, taking due acco unt of their role in the relevant banki ng system and the overall economy, and non-
discriminatory so as to avoid undue distortive effects on ne ighbouring markets and the intern al market as a whole. In 
application of the principle of non disc rimination on the grounds of nationality, all institutions incorporated in the 
Member State concerned, including subsidiaries, and with si gnificant activities in that Me mber State should be covered 
by the scheme’. 
17  See paragraph 2.3 of ECB Opinion CON/2008/44 and paragraph 3.5 of ECB Opinion CON/2008/48. 
6 This opinion will be published on the ECB’s website.  
  Done at Frankfurt am Main, 24 October 2008. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET