Stockholm - Sweden is set to establish a fund to help banks that run into problems in future, Financial Markets Minister Mats Odell said Tuesday.

The Swedish National Debt Office was to manage the fund that was to be financed by the state and banking sector. The aim was to "stabilize" the bank sector and ensure lower mortgage rates, Odell told reporters.

The fund was to run along the lines recently approved by Eurozone countries. Legislation was to be fast-tracked and could likely be passed next week. The opposition was to be invited to discuss the bill on Thursday.

The plan included freeing up lending between banks, and the government was to take over shares if a bank requested funds.

Sweden, a member of the 27-nation European Union, has not introduced the joint European currency, the euro.

Odell - like Finance Minister Anders Borg - has said the Swedish bank sector was stable and the banks were solvent.

The Stockholm bourse general index OMXS continued its climb Tuesday and in mid-afternoon was up some 5 per cent. The main banking shares were also in positive territory. (dpa)