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Housing debt is concentrated in the Helsinki metropolitan area and other growth centres, where housing is more expensive. A large proportion of loans is borne by a small proportion of households.

The authorities should be equipped with new tools for ensuring the banking sector’s capital adequacy and preventing overheating on the housing market.

Accommodative monetary policy is necessary for price stability and economic recovery. However, it may create risks for financial stability.

A larger average loan size and longer loan repayment periods have permanently increased household vulnerability. In recent years, debt developments have levelled off.

Mortgage lending can be reined in by setting higher risk weights for loans. There are, however, differences in calculation methods. Harmonisation would enhance a level playing field between banks.

The financial crisis has increased our understanding of cross-border stability threats. Overheating on the international financial markets would push up asset prices and possibly also increase the supply of loans.

The impact of regulation on growth in loan margins has been exaggerated. The impact is strongest in high-risk loans.

According to the Bank of Finland’s stability report, the financial system has remained stable despite the lack of improvement in the Finnish economy. Weak developments of the Finnish economy and risks building up on the financial markets, such as growing search for yield and low interest rates, could expose the system to risks.

The consequences of a banking crisis could be severe in the exceptionally concentrated Finnish banking system.

Insurance companies’ role as major investors can cause market disruptions if the companies have to resort to forced sales.

The settlement and custody services of the Finnish securities markets are being revised. The aim is to put in place a more efficient and risk-fee infrastructure.

The basic operations of the Finnish financial markets are increasingly vulnerable to disruptions spreading from international systems. Preparation for disruptions in basic services must take place at national level.

The term ‘shadow bank’ often evokes negative connotations. However, the importance of shadow banks to the financial markets is increasing.

Efforts are being made to prevent the outbreak of financial crises by monitoring warning indicators. When should the alarm bells ring?

The financial difficulties of small and medium-sized enterprises in the euro area are easing gradually. In Finland, financing costs are increasing slightly.

Confidence is vital to the financial system. Could the next crisis stem from banks’ faltering confidence in other banks’ systems, caused by a cyber attack?

The crisis is affecting banks’ business models. In the euro area, bank profitability has been eroded by the path of the economy, weak credit developments and the prolonged period of low interest rates.

The build-up of housing debt, concentration in the banking system and an environment of low interest rates over an extended period of time expose the economy and the financial system to problems.