"If our bank sector grows too large, it can create a very serious risk to the Swedish economy," said Borg, adding that when economies go bust, as in Iceland and Ireland, a period of over-confidence has usually come first.
The economic growth in Sweden has seen a sharp increase in the third quarter of 2010 compared to the same period last year and the gross domestic product, GDP, grew by 6.9 percent, news agency TT reports.
This is also higher than what was projected at the start of this year when analysts thought a growth of 5.3 percent was possible. High levels of private consumption as well as an increase in public consumption are thought to have contributed to the sharp growth.
The Swedish krona has also gotten stronger in the past year and the interest rate for a two-year government bond was raised to 1.64 percent.
"This is a really good figure. Swedish economy is really strong right now considering how it looks in the rest of the world," said Anna Winsth, economist at Nordea, one of Sweden's largest banks.