Bank of Finland articles on the economy
Bank of Finland Bulletin 5/2020 - Monetary policy and the global economy
Published 17 Sep 2020
pdf, 563 kB
Bank of Finland Bulletin 4/2020 - Monetary policy and the global economy
Published 11 Sep 2020
pdf, 16.0 MB
Monetary policy is supporting economic recovery — but the outlook for employment remains weak17 Sep 2020, Bank of Finland Bulletin 5/2020
Monetary accommodation has opened up space for other economic policies in the euro area, which needs to be put to good use by pursuing economic reforms. Productivity and employment growth ultimately rest on our ability to reform.
Monetary policy implementation in changing times25 Aug 2020, Bank of Finland Bulletin 4/2020
Over the past decade the tools for implementing monetary policy have become ever more diverse. These measures now include refinancing banks at favourable terms and large-scale asset purchases.
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Lowering the loan cap will mitigate household indebtedness and strengthen mortgage borrowers’ risk resilience. It will not, however, remove the risks relating to the record-high level of indebtedness.
Housing debt has grown, both in absolute terms and relative to income, especially in growth centres, where housing is more expensive and subject to greater pressures from demand than elsewhere.
The Finnish real estate investment market is lively and large in proportion to the size of the economy, foreign investment and high valuations may expose the Finnish market to economic shocks from abroad. The risks may reflect on banking particularly via lending.
When indebted households cut their spending during an economic downturn, this also increase the financial difficulties of non-financial corporations.
The aim of the loan cap is to rein in household indebtedness and prevent housing price bubbles. Finland badly needs other instruments that can also restrict indebtedness.
A single European Deposit Insurance Scheme would reduce the risk of deposit runs.
Finns are among the leaders in Europe in the use of digital financial services. Nordic banks have invested in digital services.
The systemic risk buffer is an additional capital requirement that can bolster Finland’s structurally vulnerable banking sector.
In retail banking, the two key services are the provision of credit and management of payment transfers. The revised Payment Services Directive (PSD2), which entered into force in Finland in January 2018 may revolutionise the operating environment for banks.
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