Stockholm (Sweden), September 4: The Swedish government on Saturday pledged to provide electricity companies liquidity guarantees in a bid to prevent a financial crisis sparked by Europe's energy crunch.
The guarantees, worth "hundreds of billions" Swedish crowns, were designed to help companies struggling to meet the surging collateral requirements needed to trade electricity and will be in place before stock markets close on Monday.
Skyrocketing prices in Europe made it more expensive for utilities to buy and sell electricity because of the additional collateral required to guarantee trades on power markets. This has in turn led to a lack of liquidity for utilities and pushed them at risk of insolvency, according to the government.
Prime Minister Magdalena Andersson said at a press conference in Stockholm on Saturday that swift measures were necessary.
"If we don't act, there is a serious risk of disruptions in the financial system, which in the worst case could lead to a financial crisis," Andersson said.
The guarantees will be extended to utilities in other Nordic and Baltic countries registered with Nasdaq Clearing, Andersson said.
Source: Xinhua
