“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, market makers are requiring significantly larger margins to maintain those hedges. Sweden is attempting to fill the developing liquidity 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.