Sweden will provide up to Skr50bn ($6bn, €4.6bn, £4.2bn) in new capital to banks to encourage them to keep lending.

'To get credit markets working again is crucial to prevent the economic downturn from worsening,' Anders Borg, finance minister, and Mats Odell, financial markets minister, said in a joint statement yesterday.

Few Scandinavian banks speculated in US structured debt and Sweden, like other governments in the region, has not had to recapitalise any of its big banks.

Financial Times