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1028
XIV. CREDIT AND INSURANCE ESTABLISHMENTS OF SWEDEN.
banks and business houses.* The gold cash of the Bank within the
country shall always amount to at least 40 million kronor. If the
gold cash surmounts 40 million kronor the issuing of notes can be
further increased with, at the highest, the amount surpassing 40 million
kronor. In this way, when the whole of the permissible issue of notes
has been used, this can be increased with a double amount of the
reinforcement of the gold cash.
Principally in order to be able to fill the want in the metallic cash,
the home gold cash respectively the bank is authorized to use foreign
credit to the amount fixed by the Riksdag in the bank statutes (at
present 20 million kronor). To the same purpose serves, among other
things, the rule that the bank shall possess easily salable foreign
government bonds to an amount at least corresponding to the reserve
fund. The banknotes are legal means of payment. The smallest value
of a note is 5 kronor.
The bank business may include the following items. It can buy
and sell Swedish bonds and easily salable foreign government bonds
noted on a foreign Exchange and by other agreement take over the
bonds of the Swedish State and easily salable foreign government bonds
as well as negotiate the buying and selling of Swedish State bonds and
the General Mortgage Bank scrips (see p. 599). The bank is allowed
to discount, to buy and sell home and foreign bills of at the highest
6 months’ notice; to give loans for a period not exceeding 6 months, on
bonds, shares, and other valuable papers and goods; to discount valuable
papers for an unlimited time with at the highest 3 months’ notice; to
open cash credit or credit on current account for a period not
exceeding 12 months on bonds, shares, mortgages, or security guarantees.
On the security of the last mentioned guarantee, the Bank of Sweden
besides this can grant instalment loans for long periods from a special
fund (instalment loan fund) under its management, with a stock
capital of 12 V2 million kronor. It is determined that, at the highest,
15 million kronor can be used as cash credit and as credit on current
account. An encroachment on the liberty of the bank to choose between
the above mentioned ways of lending out money, is the rule that such
part of the current amount of notes as is not covered by metallic
cash shall correspond to easily salable foreign government papers,
Swedish bonds being noted on a foreign Exchange, and home and
foreign bills of exchange.
The bank receives investments on deposit as well as on current
account. For deposits the bank must as a rule not pay interest, it may,
however, open a check account with interest to such firms as have
discounting in the bank and who do not carry on banking business
* The three Scandinavian central banks have opened such accounts with each othtr
in order, as far as possible, to prevent the despatching of gold between the respective
banks.
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