[Sweden]: Message to the Federal Reserve System

[Connor]

Kingdom of Sweden Reinfeldt Administration

December 2006​

Dear Board of Govenors,

On behalf of the Government of Sweden, the Department of Finance is requesting urgent clarification regarding credit the accrued interest on the principal amount of $14,764,767,735.92 held within our account in the Federal Reserve System, this figure according to our most recent interest payment dated in December 2003. According to our understanding of the original the agreed terms of our Reserve Savings Account, our deposit is due to accrue interest on a bi-monthly basis which, at the last published interest rate of 1.2% would bring our account value to a total of $18,279,292,148.38.

My office, at the direction of the Executive Office of the Prime Minister, has been responsible for the total review of government finances and any discrepancies thereon in. We have identified a number of discrepancies surrounding our arrangements with the Federal Reserve System. Particularly of mention is the observed absence of credited interest payments or any formal statements reflecting such accruals over the duration of the deposit since the aforementioned statement, now spanning 36 months. This raises serious questions about the precise terms of the agreement, the basis for interest calculations and the schedule for disbursements. We request a detailed explanation on the following points:

1. Confirmation of the applicable interest rate and its calculation methodology.
2. The timeline and frequency of interest payments under the agreement.
3. Accounting statements detailing interest accrued and any payments made to date.
4. Any conditions or clauses that might affect the disbursement of interest.
5. The foundation and process for the regular updating of account holder balances.

Clarity on these matters is critical to maintaining trust and ensuring compliance with our financial arrangements. We expect a prompt and comprehensive response that addresses our concerns fully.

Regards,
Mats Odell
Assistant Secretary of Finance for the Financial Market
Department of Finance

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Odinson

 

[Odinson]

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OFFICE OF THE VICE CHAIR​

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SECURE​

TO: Mats Odell, Assistant Secretary of Finance for the Financial Market of the Kingdom of Sweden ( Connor )
FROM: Avery Black, Vice Chair of The Board of Governors of The Federal Reserve System

Assistant Secretary Odell,

It is a pleasure to hear from you. Thank you for clearly stating your questions, which I have answers to below. Also, the kingdom's current account balance stands at: $18,034,884,658.70.


1. Confirmation of the applicable interest rate and its calculation methodology.
The interest rate paid to the Kingdom of Sweden's account for the most recent interest period was: 1.0%. This, however, is not reflective of the varying interest rate which has been paid out to the kingdom's account since it's inception. Below is a summary on interest from our public paperwork:

"Interest Rates with the Federal Reserve are uniquely fluid, but will normally range from 0-10%. While interest payments are not always guaranteed, the Federal Reserve will never charge negative interest to an account. The account holder may view their account balance at any time, as well as their account history which will include interest payments. While the Interest Rate may change between Interest Periods, all account holders are given the same interest rate for a given period. Interest Payments are based off of the Interest Rate and certain minimum account requirements. Any account with less than $1-billion is not eligible to receive an Interest Payment."

To further expand on this, financial advisors within the Federal Reserve advise the Board of Governors on the current interest rate. The Board of Governors, however, has the final say on what the interest rate will be and regularly votes on these changes. Geopolitical factors such as war, trade issues, and even natural disasters can play a part into determining the interest rate, as well as economic factors such as the general state of the American and global economies, just to name a couple.

I thought that you may be curious as to what the interest rate has been over time for the history of your account, so I have included the graph below for your convenience:

2. The timeline and frequency of interest payments under the agreement.
There are currently six interest payments made per year, which are stretched out relatively evenly (longer months of the year and bank holidays play a factor into this). The Board of Governors is currently discussing changing this to four interest payments a year (once each quarter) on fixed dates so that it would better line up with the fiscal year. If that measure would be approved, the Swedish government, as an account holder, would be informed.


3. Accounting statements detailing interest accrued and any payments made to date.
You can view all credits and debits to the kingdom's account here.


4. Any conditions or clauses that might affect the disbursement of interest.
Our public paperwork, linked above, has this specific clause that would affect the disbursement of interest: "Any account with less than $1-billion is not eligible to receive an Interest Payment."


5. The foundation and process for the regular updating of account holder balances.
The balance of the kingdom's account can be viewed here. If you are ever concerned that there may be a discrepancy, you can view all of the credits and debits to the kingdom's account here.


Finally, you may want to include to your report to the Prime Minister that the Federal Reserve is an independent central bank because its monetary policy decisions do not have to be approved by the President or by anyone else in the executive or legislative branches of government. It does not receive regular funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. With that being said, the Federal Reserve System is backed by the full faith and credit of the United States government.

On behalf of the Board of Governors, I want to thank the Swedish government for its continued business with the Federal Reserve. We have had clients off and on, but other than our ongoing relationship with the United States government, no other national government has been a client as long. I hope that this correspondence has addressed your concerns, but if it has not, I am happy to provide more information.​

Best regards,

Avery Black
Vice Chair of The Federal Reserve System
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[Connor]

Kingdom of Sweden Reinfeldt Administration

December 2006​

Dear Vice Chair Avery Black,

First and foremost please allow me to extend my sincere thanks for your swift and considered response to our recent correspondence regarding the status of our Reserve Savings Account and the application of due interest over the past eighteen months. We appreciate your detailed analysis of our accounts and your reaffirmation of the valued relationship between us. Your reply has been received with interest by the Prime Minister.

We have long had a substantial investment in the Federal Reserve System, surpassing ten billions dollars some years ago. On that thread, I would like to take this opportunity to propose a collaborative initiative between the Federal Reserve System and the Government of Sweden. Given the high level of interest generated internally by the visibility of our holdings and the wider implications this carries for sovereign participation in reserve systems globally, we believe there is a unique opportunity to build public trust and stimulate additional investment in your system.

The Department of Finance would welcome the opportunity to develop a joint marketing campaign that highlights the strength, transparency, and long-term stability of the Federal Reserve System as a trusted partner for sovereign reserve holdings. Such an initiative could meaningfully bolster global investment, particularly among nations seeking a proven, secure, and expertly managed reserve solution. The greatest concern for any sovereign investor is the potential loss of capital - something the Federal Reserve System has consistently safeguarded against with exceptional precision.

With our continued support and endorsement, we are confident that this message will resonate powerfully across financial and diplomatic circles.

I look forward to your thoughts and would be pleased to discuss this further.

Regards,
Mats Odell
Assistant Secretary of Finance for the Financial Market
Department of Finance

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RESTRICTED
Crown Copyright © Kingdom of Sweden
All information is encrypted and subject to the Swedish Document Classification and Security Act 1995​

Odinson