The Riksbank’s request for a capital injection from the government is not a good look for an independent central bank. But its QE-related losses will be smaller than those of many other central banks: the “bailout” is required because of its accounting treatment of paper losses and rules governing its equity. That said, it also reflects the dwindling use of banknotes in Sweden which means the Riksbank’s earnings potential is low and raises genuine concerns about its long-run financial independence.
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