The Bank of Finland published its annual assessment of Finland’s financial stability, finding that the financial system has remained stable but that risks have increased and are now largely driven by developments outside Finland, including Russia’s war in Ukraine and deteriorating confidence in international cooperation. The assessment argues that Finnish banks must be able to provide lending and other critical services even in hard-to-foresee crisis scenarios and highlights the need for releasable capital buffers, potentially by allowing more flexible use of the countercyclical capital buffer requirement than at present. It identifies high household indebtedness and the prevalence of variable-rate loans as key vulnerabilities, notes the Finnish Government’s April decision to ease provisions on mortgage lending and lending to housing companies, and indicates that higher bank capital buffer requirements may be needed if risks grow. The Bank also points to increasing cybercrime and scams targeting customers and suggests revising rules on the attribution of liability for such scams if banks do not take action, while urging Finland to promote the European Commission’s Savings and Investments Union plans to better channel savings into productive investment.
Bank of Finland 2025-05-21
Bank of Finland financial stability assessment warns of growing geopolitical risks and calls for more flexible countercyclical capital buffers
The Bank of Finland's annual financial stability assessment reports that while Finland's financial system remains stable, risks have increased due to external factors like Russia's war in Ukraine. The assessment emphasizes the need for Finnish banks to maintain lending capabilities in crisis scenarios and suggests more flexible use of the countercyclical capital buffer. It also highlights vulnerabilities such as high household indebtedness and variable-rate loans, and calls for action against rising cybercrime and scams.