Browsing by Subject "systemic risks"

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Now showing items 1-15 of 15
  • Savolainen, Eero; Vauhkonen, Jukka (2015)
    Bank of Finland. Bulletin 2/2015
    The consequences of a banking crisis could be exceptionally severe in Finland’s concentrated banking system. Regulatory means must therefore be deployed to ensure the capital adequacy and liquidity of Finnish banks remain strong under all circumstances.
  • Bank of Finland (2019)
    Bank of Finland. Bulletin 1/2019
    The dominant position of the US dollar exposes other countries to changes in the economy and domestic policies of the United States, while also creating global systemic risks. The role of the dollar is expected to decrease with time as the roles of other economic areas and their currencies increase. Given the lack of a realistic competing currency, however, it is rather unlikely that the status of the dollar will weaken at the moment, which highlights the need for cooperation in terms of managing risks to the international financial system.
  • Nykänen, Marja (2022)
    Bank of Finland. Bulletin 1/2022
    The Russian invasion of Ukraine is causing an immeasurable amount of human suffering and destruction. The military actions will have extensive and long-term impacts on Finland’s and the world’s economy, politics and financial stability risks. In view of the uncertain operating environment and the structural vulnerabilities of the Finnish financial system, it is important to further strengthen the resilience of borrowers, banks and payment systems in Finland. More effective instruments are required to rein in the excessive indebtedness of Finnish households.
  • Savolainen, Eero; Tölö, Eero (2017)
    Bank of Finland. Bulletin 2/2017
    The Finnish, Swedish, Norwegian and Danish banking sectors have broadly similar strengths and weaknesses. Their profitability is strong, capital adequacy solid, and loan losses have been at historically low levels for a long time. On the other hand, the national banking sectors are large and concentrated and their systemic risks relate largely to lending to the residential and commercial real estate markets.
  • Bank of Finland (2015)
    Bank of Finland. Bulletin 5/2015
    Threats to the stability of the euro area financial system relate to the risks to global economic growth – such as uncertainties around developments in China – and to the international financial markets. The profitability of the euro area banking sector has improved from the weak level witnessed previously, but the large amount of non-performing loans continues to weigh on banks’ balance sheets. Risks to the Finnish financial system are associated with the weakness of the economy and household debt. In order to contain potential overheating on the housing loan market and household indebtedness, the authorities will need new additions to their toolbox.
  • Bank of Finland (2015)
    Bank of Finland. Bulletin 2/2015
    Finland’s domestic financial system has continued to function well despite the prolonged recession. Short-term risks to the stability of the domestic financial system relate particularly to weaker-than-forecast developments in the Finnish economy and risks developing on the international financial markets.
  • Savolainen, Eero (2015)
    Bank of Finland. Bulletin 2/2015
    Insurance companies promote economic activity by offering savings products and protection against risks. At the same time, insurance companies themselves are also investors. The reliability of insurance business is important for the economy as a whole. The low level of interest rates weakens insurance companies’ investment returns and increases the market value of liabilities in the sector; when protracted, this poses problems, particularly for life insurers. Systemic risks in the insurance business have begun to attract attention, especially in consideration of insurance companies’ importance as significant institutional investors.
  • Laakkonen, Helinä; Nyholm, Juho; Kiviniemi, Arttu; Kauko, Karlo (2022)
    Bank of Finland. Bulletin 1/2022
    The Finnish banking sector’s key vulnerabilities are structural and linked to the Nordic housing market. The result of the Bank of Finland’s and Financial Supervisory Authority’s (FIN-FSA) joint stress testing exercise indicate that the Finnish banking sector is resilient enough to withstand a severe economic and financial crisis on the Nordic housing market. In the stress test, the Common Equity Tier 1 (CET1) capital ratio for the banking sector weakens by 1.4–4.7 percentage points, but still remains above minimum capital requirements. The major losses incurred by the banks would stem from an increase in credit risks, whereas market risks have a clearly minor importance for banks’ capital adequacy.
  • Taipalus, Katja; Timonen, Jouni (2015)
    Bank of Finland. Bulletin 4/2015
    In a prolonged environment of exceptionally low interest rates, the authorities are responsible for ensuring the adequate monitoring of potential vulnerabilities due to low interest rates. Before measures to manage risks can be implemented, the risks must first be identified. Owing to continuous market developments, there is a strong need to update the analysis conducted by the authorities.
  • Koskinen, Kimmo; Laakkonen, Helinä (2017)
    Bank of Finland. Bulletin 2/2017
    Investors’ optimism on the financial markets can rapidly turn to risk aversion if global economic or political uncertainty increases. Longer-term risks related to indebtedness and the housing markets are considerable, especially in emerging economies, although the Nordic countries, for example, are also vulnerable. The condition of the banking sector and public finances gives cause for concern particularly in some euro area countries. In addition, uncertainties regarding financial regulation have increased in the United States.
  • Kauko, Karlo; Laakkonen, Helinä; Kiviniemi, Arttu; Nyholm, Juho (2021)
    Bank of Finland. Bulletin 1/2021
    Stress tests are important analytical tools that measure the resilience of banks to sudden, dramatic disruptions to the operational environment. The Bank of Finland and the Financial Supervisory Authority (FIN-FSA) have together developed a new stress testing framework as a more flexible means of testing the loss-absorbing capacity of banks when facing certain local systemic risks. The tool can also be used, for example, when setting macroprudential (capital) buffers.
  • Bank of Finland (2017)
    Bank of Finland. Bulletin 2/2017
    The Finnish financial system has operated reliably. The probability of serious disruptions related to economic and credit cycles is small in the immediate future. The structural vulnerabilities of the Finnish financial system have, however, increased, against a backdrop of household debt accumulation and changes in the structure of the banking system.
  • Pylkkönen, Pertti; Savolainen, Eero (2016)
    Bank of Finland. Bulletin 2/2016
    At the beginning of 2016, a new life and non-life insurance company solvency regulation was launched in EU, the so-called Solvency II regime. In the new regulation, both assets and liabilities of insurance companies are valued at market terms. The timing of the reform is awkward for the companies, as low interest rates and economic uncertainty burden company solvency.
  • Nykänen, Marja (2018)
    Bank of Finland. Bulletin 2/2018
    The primary purpose of the macroprudential measures that restrict lending for house purchase is to reduce the economy’s exposure to risks stemming from high household indebtedness. These risks are realised when indebted households respond to disturbances in the economy by sharply reducing consumption. Macroprudential policies that impose capital buffer requirements for banks, on the other hand, are designed to ensure that the banking system's lending capacity and ability to function remain satisfactory under all economic conditions.
  • Bank of Finland (2016)
    Bank of Finland. Bulletin 2/2016
    The Finnish financial system has operated smoothly amid the difficult economic conditions of the past few years. However, financial stability can never be taken for granted. Due to the structural vulnerabilities of the financial system – the concentration and interconnectedness of the financial sector – the consequences of financial crisis could be particularly serious in Finland. To strengthen the stability of the system, the macroprudential toolkit available to the Finnish authorities should be brought to an internationally comparable level.