Competing narratives in the Swedish 1929 deposit loss-debate

In early April 1929, eight Swedish savings banks were found insolvent and closed due to economic crimes committed by some of their founders. After the crash, the Swedish parliament entered a debate about whether the state should cover some, all or none of the losses of the failed banks’ 88 000 depositors. The debate, mainly between the right party and the social democrats, was characterized by competing narratives about the causes of the crash, whether the state should intervene or not, whether there existed an implicit deposit insurance or not, who should be covered among the depositors, by how much, and how an intervention should be funded and administered. The debate, and the policy decision, is unique in Swedish banking history and illustrate the importance of narratives to understand political responses to bank crashes and crises. The debate ended in mid-May with a decision to partially cover the depositors’ losses.