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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The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.
The more debt households take on during an economic upswing, the more likely they are to cut consumption when the economy begins to run out of steam.
The indebtedness of Finnish households relative to income has grown considerably since the turn of the millennium. A proportion of new residential mortgage holders have a heavy debt burden relative to their income.
Consumer credit can drive households into financial difficulties. New measures are needed to prevent increasing debt problems.
Finnish banks have granted relatively little credit to those industries most vulnerable to bankruptcies. This has helped minimise banks’ corporate credit risks.
Foreign investment in the Finnish and other Nordic property markets has increased. As a consequence the Finnish market is more vulnerable to external risks.
Investment in IT will improve banks’ long-term profitability, while weakening short-term profitability.
The accessible summary sums up the solutions presented in the Bank of Finland’s stability assessment that can get a grip on households’ excessive debt levels.
Finnish households have a worrying level of debt. Advance measures should be taken to prevent the accumulation of excessive debt.
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