Financial Times/Richard Milne, Alice Hancock, Henry Foy and David Sheppard/9-3-2022
“Sweden will give emergency liquidity support to electricity producers as its prime minister warned that Russia’s decision to halt gas deliveries to Europe could place its financial system under severe strain.”
USAGOLD note: Natural gas-burning European utilities cover their price exposure by shorting electricity futures. As a result of the rapid acceleration in natural gas prices and increased volatility, market makers are requiring significantly larger margins to maintain those hedges and some utilities are faced with demands they cannot meet. Sweden is attempting to fill the gap with cash infusions, but it is an open question how much government intervention will be required. Governments and central banks in Europe will be watching anxiously when financial markets open tomorrow.
