Coronavirus pandemic demonstrates necessity of risk buffers

The European Central Bank and national authorities have introduced extensive measures to guarantee the liquidity of the financial markets and to secure funding for firms. Government has mitigated the business sector's cash flow crisis with direct subsidies and by increasing the provision of collateral. Finnish banks have increased their lending to firms and eased the debt-servicing duties of their customers with amortisation-free periods. ‘Society’s ability to weather crisis is being deeply tested by the coronavirus pandemic. In spite of the relief measures put in place, the human and economic toll of the pandemic will prove significant,’ stated Bank of Finland Deputy Governor Marja Nykänen at the press briefing for the publication of the new issue of the journal Euro & talous.
The stability of the Finnish financial system will, in part, be influenced by how long and how severe the economic crisis is in other countries. The weakening of the global economy has been reflected in financial markets as heightened volatility and the depletion of certain sources of finance. The Nordic banking sector is strongly interlinked, and the Finnish banking sector holds large volumes of receivables from other Nordic countries. This exposes our financial system to disturbances stemming from outside Finland.
Compared with previous crises Finland's and the world's financial systems are in a stronger position to meet the coronavirus pandemic. ‘The solvency and liquidity positions of banks have been strengthened significantly after the global financial crisis,’ noted Deputy Governor Nykänen. Similarly, borrowers are on sounder footing than they were going into Finland's banking and economic crisis of the 1990s or the global financial crisis.
Finland's financial system has remained operational in spite of the shock. The coronavirus pandemic demonstrates the importance of a well-functioning financial sector. ‘It is important that banks, firms and households shore up their finances by building buffers in the good times. Finland must resolutely continue its development of macroprudential instruments that stabilise the financial system. This will enhance society's readiness to confront crises in the future,’ stressed Deputy Governor Nykänen.
The economy's contraction will weaken the solvency of many households and firms. Banks will inevitably see a rise in credit losses on corporate and household loans. The volume of credit losses will especially rise if restrictions are extended and the economy enters a long-lasting recession. However, the current recession is in many respects different from the Finland's depression in the 1990s or the global financial crisis, which makes estimating credit losses more difficult.
To view this video from www.youtube.com, please give your consent at the top of this page.Bank of Finland press conference 5 May 2020
Keywords
Images
Links
About Suomen Pankki
The Bank of Finland is the national monetary authority and central bank of Finland. At the same time, it is also a part of the Eurosystem, which is responsible for monetary policy and other central bank tasks in the euro area and administers use of the world’s second largest currency – the euro.
Subscribe to releases from Suomen Pankki
Subscribe to all the latest releases from Suomen Pankki by registering your e-mail address below. You can unsubscribe at any time.
Latest releases from Suomen Pankki
Marja Nykänen utnämnd till medordförande i Finansiella stabilitetsrådets regionala konsultativa grupp för Europa1.7.2025 17:00:00 EEST | Pressmeddelande
Utnämningen stärker Finlands aktiva roll som främjare av global finansiell stabilitet.
Marja Nykänen nimitetty kansainvälisen rahoitusvakausneuvoston Euroopan alueellisen ryhmän toiseksi puheenjohtajaksi1.7.2025 17:00:00 EEST | Tiedote
Nimitys vahvistaa Suomen aktiivista roolia kansainvälisen rahoitusvakauden edistäjänä.
Marja Nykänen appointed as Co-Chair of Financial Stability Board’s Regional Consultative Group for Europe1.7.2025 17:00:00 EEST | Press release
This appointment reinforces Finland’s active role in fostering international financial stability.
Hushållen har mycket konsumtionskrediter – tillväxttakten har mattats av1.7.2025 10:00:00 EEST | Pressmeddelande
I maj 2025 uppgick det utestående beloppet av konsumtionskrediter som banker med verksamhet i Finland beviljat hushåll till 17,6 miljarder euro och utlåningen minskade med −0,7 % från året innan. Minskningen i det utestående beloppet av konsumtionskrediter är en följd av att utnyttjandet av konto- och kortkrediter och utbetalningarna av konsumtionskrediter utan säkerhet har minskat. Konsumtionskrediter beviljade av banker står för 63 % av hushållens totala utestående konsumtionskrediter. I maj 2025 minskade hushållens utestående kortkrediter[1] (3,6 miljarder euro) med −1,0[2] jämfört med ett år tidigare, då de utestående kortkrediterna vid motsvarande tidpunkt året innan ökade med nästan 6 %. Vid utgången av maj var 19 % av kortkrediterna räntefri betaltidskredit och 81 % äkta kortkrediter, dvs. kortkredit med ränta. I januari–maj 2025 utbetalades från bankerna 9 % mindre sedvanliga konsumtionskrediter utan säkerhet[3] jämfört med motsvarande tidpunkt ett år tidigare. Också det utestå
Kotitalouksilla runsaasti kulutusluottoja –kasvuvauhti hidastunut1.7.2025 10:00:00 EEST | Tiedote
Toukokuussa 2025 Suomessa toimivien pankkien kotitalouksille myöntämien kulutusluottojen kanta oli 17,6 mrd. euroa ja se supistui vuodentakaisesta −0,7 %. Kulutusluottokannan supistumiseen vaikuttavat tili- ja korttiluottojen vähentynyt käyttö ja vähäisemmät vakuudettomien kulutusluottojen nostomäärät. Pankkien myöntämät kulutusluotot kattavat 63 % kotitalouksien kokonaiskulutusluottokannasta. Toukokuussa 2025 kotitalouksien korttiluottokanta[1] (3,6 mrd. euroa) supistui −1,0 %[2] vuodentakaiseen verrattuna, kun vuosi sitten vastaavana aikana korttiluottokanta kasvoi lähes 6 prosentin vauhdilla. Toukokuun lopussa korttiluotoista 19 % oli korotonta maksuaikaluottoa ja 81 % pidennettyjä korttiluottoja eli korollista korttiluottoa. Tavanomaisia vakuudettomia kulutusluottoja[3] nostettiin pankeista tammi-toukokuun 2025 aikana 9 % vähemmän kuin vuosi sitten vastaavana aikana. Myös vakuudettomien kulutusluottojen kanta supistui toukokuussa. Suomessa toimivien pankkien myöntämistä kulutusluot
In our pressroom you can read all our latest releases, find our press contacts, images, documents and other relevant information about us.
Visit our pressroom