Browsing by Subject "financial stability"

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  • Bank of Finland (2021)
    Bank of Finland. Bulletin 1/2021
    The crisis caused by the COVID-19 pandemic swept the Finnish economy into a sudden recession in 2020, but the progress with vaccinations means we can already see light at the end of the tunnel. The negative economic impacts of the crisis have so far been less than feared, and the most recent economic forecasts are encouraging.
  • Bank of Finland (2020)
    Bank of Finland. Bulletin 2/2020
    The corona crisis has impacted negatively on the Finnish economy and on the country’s banks and their customers in a number of ways. The banks now need to deploy the financial buffers they have been accumulating since the global financial crisis just over a decade ago. By granting new loans and amortisation holidays, the banks can for their part help businesses and households survive the acute phase of the current crisis. At the same time, banks must prepare for an increase in loan losses from previously granted loans.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 2/2019
    Finnish households are carrying a worryingly large amount of debt. Housing loans and housing company loans have become more common and larger, and their repayment periods have become longer. In addition, the supply of consumer credit has become broader and more varied.
  • Bank of Finland (2020)
    Bank of Finland. Annual report
    ANNUAL REPORT 4 MONETARY POLICY 5 FINANCIAL STABILITY 35 MONEY AND PAYMENTS 54 FINANCIAL ASSET MANAGEMENT 70 INFLUENCE AND COOPERATION 80 SOCIAL RESPONSIBILITY 102 ACTIVITIES AND STRATEGY 135 BANK OF FINLAND IN A NUTSHELL 137 THE BANK OF FINLAND FOSTERS ECONOMIC STABILITY 138 DIVISION OF RESPONSIBILITIES BETWEEN MEMBERS OF THE BOARD 141 BANK OF FINLAND OBJECTIVES AND RESULTS FRAMEWORK 144 FINANCIAL STATEMENTS 150 BALANCE SHEET 151 PROFIT AND LOSS ACCOUNT 154 THE BOARD'S PROPOSAL ON THE DISTRIBUTION OF PROFIT 156 ACCOUNTING CONVENTIONS 157 NOTES ON THE BALANCE SHEET 166 NOTES ON THE PROFIT AND LOSS ACCOUNT 195 APPENDICES TO THE FINANCIAL STATEMENTS 208 NOTES ON RISK MANAGEMENT 210 AUDITOR'S REPORT 217 STATEMENT REGARDING THE AUDIT 219 ORGANISATION 222
  • Bank of Finland (2021)
    Bank of Finland. Annual report
    OPERATIONS AND STRATEGY 4 BANK OF FINLAND IN A NUTSHELL 6 BANK OF FINLAND STRATEGY UPDATED IN 2020 7 DIVISION OF RESPONSIBILITIES BETWEEN MEMBERS OF THE BOARD 12 STRONG EXPERTISE IS THE CURRENCY OF STABILITY 15 THE BANK OF FINLAND’S BUDGET FOR 2021 AND OPERATING EXPENSES 20 MANAGING ENVIRONMENTAL IMPACTS: COVID-19 HAS CUT THE BANK OF FINLAND’S EMISSIONS 26 ANNUAL REPORT 29 MONETARY POLICY 30 FINANCIAL STABILITY 67 CASH AND PAYMENTS 91 MANAGEMENT OF FINANCIAL ASSETS 116 ENGAGEMENT AND COOPERATION 138 SUSTAINABILITY AT THE BANK OF FINLAND 165 FINANCIAL STATEMENTS 170 BALANCE SHEET 171 PROFIT AND LOSS ACCOUNT 174 THE BOARD'S PROPOSAL ON THE DISTRIBUTION OF PROFIT 176 ACCOUNTING CONVENTIONS 177 NOTES ON THE BALANCE SHEET 184 NOTES ON THE PROFIT AND LOSS ACCOUNT 211 APPENDICES TO THE FINANCIAL STATEMENTS 222 NOTES ON RISK MANAGEMENT 224 AUDITOR'S REPORT 230 STATEMENT REGARDING THE AUDIT 231 ORGANISATION 234
  • Jantunen, Lauri (2019)
    Bank of Finland Bulletin. Blog
    Artificial intelligence (AI) and massive data are quickly becoming an integral part of finance. These advanced technologies are being deployed in all different stages of business ranging from risk management to portfolio optimization. While these technologies have the potential to improve existing processes and create totally new products, services and distribution channels, these innovation may also contain features that can form new type of vulnerabilities in financial markets.
  • Bank of Finland (2018)
    Bank of Finland. Bulletin 2/2018
    Rising household debt poses risk to the economy 3 Financial stability: Lowering the loan cap will reduce the risks associated with debt 5 Wide regional disparities in Finnish house prices and household indebtedness 20 The Finnish real estate investment market 27 Household indebtedness contributing to corporate loan losses 37 Instruments designed to mitigate indebtedness 47 Progress in work to complete Banking Union 53 Nordic banks go digital 60 Systemic risk buffer protecting the banking sector under difficult conditions 68 Effects of the revised Payment Services Directive: first assessment 72 Digitalisation poses new security challenges for payment systems 76
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 2/2019
    Table of Contents Editorial: Rising household debt levels must be addressed in time 3 Financial stability: Debt must be measured against repayment capacity 6 The highly indebted cut spending as the economy slows 25 Capping debt-to-income ratios complementary to housing loan cap 34 New methods needed to rein in consumer credit 41 Corporate credit risk affected by business cycles and industry factors 47 Finnish commercial property market increasingly intertwined with foreign markets 57 The impact of digitalisation on bank profitability 66
  • Bank of Finland (2020)
    Bank of Finland. Bulletin 2/2020
    Editorial: Regulation has strengthened the financial system’s resilience 3 Financial stability assessment: Pandemic demonstrates necessity of risk buffers 6 Coronavirus shock will further weaken bank profitability in the euro area 19 Banks must be able to finance firms and withstand loan losses amid the coronavirus pandemic 24 Nordic countries are vulnerable to housing market risks aggravated by the coronavirus pandemic 35
  • Voutilainen, Ville (2019)
    Bank of Finland. Bulletin 2/2019
    Finnish household debt relative to income has grown significantly since the turn of the millennium. In future, excessive borrowing could be stemmed by, for example, restricting the amount of credit available to households relative to their levels of income
  • Koskinen, Kimmo (2020)
    Bank of Finland. Bulletin 2/2020
    Expectations of a deteriorating economic outlook increased the risks to banks’ operating environment even before the coronavirus pandemic spread to Europe. At the end of 2019, banks’ return on equity was 5.2%, compared with 6.2% a year earlier. While some banks were experiencing profitability challenges already prior to the outbreak of the pandemic, profitability also differs greatly between countries, bank business models and individual banks. Due to the coronavirus pandemic, banks’ income development will further deteriorate, and it is likely to fall well below banks’ imputed cost of equity. The effects of the pandemic are widely reflected in the stock prices of European banks (Euro Stoxx Banks Index), which have fallen by 40% since the beginning of 2020.
  • Manninen, Otso (2015)
    Bank of Finland. Bulletin 2/2015
    If loss in interbank confidence regarding banking sector balance sheets intensified the crisis in 2008, banks’ faltering confidence in other banks’ systems could cause the next crisis, experts warn. Confidence is vital to the financial system, and as account balances are situated in cyberspace, confidence in the numbers on the screen is of the utmost importance. From a practical point of view it is irrelevant whether a loss of confidence is due to the realisation of financial market risks or cyber risks.
  • Manninen, Otso; Tiililä, Nea (2020)
    Bank of Finland Bulletin. Analysis
    The need for sustainable finance has grown because of the urgency to mitigate climate change. One proposal to encourage sustainable finance is the Green Supporting Factor, which would make it less costly for entities in the financial sector to finance environmentally sustainable investments. However, it is not clear how well this would incentivise companies in the real economy to ‘greenify’ their investments. Furthermore, the uncertainties and potential adverse effects of the Green Supporting Factor make it an alternative all the less appealing.
  • Laine, Tatu (2018)
    Bank of Finland. Bulletin 2/2018
    Reliable payment and settlement systems are basic requirements for maintaining financial stability and fostering economic activity. The smooth functioning of society would quickly become disrupted if businesses and households were to lose trust in payment services or the accuracy of bank account balances, for example.
  • Nykänen, Marja (2019)
    Bank of Finland. Bulletin 2/2019
    Finland's financial system is structurally vulnerable due to the country's high levels of household debt and proportionately large banking system. Indebted households respond to declining economic conditions and increased uncertainty by reducing their levels of consumption and investment. Companies see their business conditions deteriorate, and the risks to the financial system are amplified.
  • Kim, Soyoung; Mehrotra, Aaron (2017)
    BOFIT Discussion Papers 4/2017
    We examine the effects of monetary and macroprudential policies in the Asia-Pacific region, where many inflation targeting economies have adopted macroprudential policies in order to safeguard financial stability. Using structural panel vector autoregressions that identify both monetary and macro-prudential policy actions, we show that tighter macroprudential policies used to contain credit growth have also had a significant negative impact on macroeconomic aggregates such as real GDP and the price level. The similar effects of monetary and macroprudential policies may suggest a complementary use of the two policies at normal times. However, they could also create challenges for policy-makers, especially during times when low inflation coincides with buoyant credit growth.
  • Asplund, Tuulia (2017)
    Bank of Finland. Bulletin 2/2017
    The European Union has for about two years witnessed the conduct of macroprudential policy mainly based on EU legislation and calibrated for national circumstances. In most cases, the measures have been of a tightening nature and aimed at addressing the banking sector’s structural risks and lending for house purchase. Regulatory reforms and macroprudential measures have improved the risk resilience of the bank-centred EU financial system. Work on also targeting macroprudential policy at stability risks building up beyond the banking system is at an initial stage.
  • Chernykh, Lucy; Davydov, Denis; Sihvonen, Jukka (2019)
    BOFIT Discussion Papers 2/2019
    We use a novel, household opinions-based measure – Public Confidence in a Bank – to explore the role of bank-level and system-wide determinants of customers’ trust in banks. Our study covers a panel of approximately 260 large Russian commercial banks publicly monitored during 2010–2017. We find that public confidence in a bank is highly sensitive to the industry-level financial stability indicators, but less sensitive to bank-level risk characteristics. This result reveals an important role of overall banking sector stability in determining public perception of the safety and soundness of individual banks.
  • Bank of Finland (2018)
    Bank of Finland. Bulletin 5/2018
    Housing company loans and consumer credit add to high and rising levels of household indebtedness. The macroprudential toolkit needs to be replenished with borrower-based instruments that take into account loan applicants’ repayment ability and are able to address the rise of household indebtedness as a whole. Nordea's redomiciliation has increased the size and structural vulnerability of the Finnish banking sector. Italy's budget crisis and Brexit proceedings have contributed to uncertainty in Europe. Cyber risks and climate change pose yet further challenges for financial stability.
  • Bank of Finland (2021)
    Bank of Finland. Bulletin 1/2021
    The vulnerabilities related to housing finance have increased in Finland during the COVID-19 pandemic. Long housing loans are being taken out more than ever and a larger proportion of new mortgages are being granted to borrowers whose total debts will then be very high relative to income. The persistent upward trend in household indebtedness will undermine the economy’s ability to withstand future economic crises. A debt-to-income cap and a limit on the maturity of housing loans should be introduced without delay to stop the loosening of credit standards.