Household behaviour and business activity continue to be very much influenced by the COVID-19 pandemic. The prospects for the economic environment returning to a state of normalcy are improving, however, as vaccine rollouts gather pace in Finland and abroad. The Finnish economy has held up better than feared in the worst-case scenarios envisaged one year ago, and the financial system has continued to function well. The economy's better-than-expected performance can be attributed especially to the policy measures put in place domestically and in the euro area, and to the ability of households and businesses to adjust to the emergency conditions.

The capital requirements for banks were revised recently to improve the financial system's resilience to shocks. What remains is the finalisation of the reforms and the specification of implementation. The assessment and monitoring of the overall impact of regulation is important to ensure fair competition between banks and the financial system's ability to support sustainable economic growth.