Finnish households have more debt than ever before, and amid fast rising interest rates. The Finnish financial system has remained stable despite the spring turbulence in the international financial markets.
The increase in household and investor indebtedness from housing company loans has been a concern to the authorities. Housing company loans still account for a considerable share of the financing for new homes, but new legislation will start to curb the level of debt incurred via housing company loans.
Capital buffer requirements imposed on banks are among the most important instruments available in the macroprudential policy toolkit. They protect the ability of banks to withstand losses and provide credit during severe economic and financial crises.
In Finland, it should be possible to impose a countercyclical capital buffer requirement on banks before the credit cycle overheats. This would allow the authorities, as necessary, to lower the capital requirements for banks during a crisis situation on a more flexible basis than at present.
In 2022, a backup system was put in place for safeguarding daily payments during exceptional situations affecting society. The authorities and the financial sector should continue to enhance their preparedness for coping with severe disruptions in society that threaten the availability of normal banking and financial services.
There is still work to be done to improve the financial system’s resilience to crises. Key steps would include a stronger cap on household borrowing in Finland, and a common system of protection for bank deposits across Europe.
Especially households with high debts in relation to their income may come under particluar strain in the near future, as both loan servicing and other daily costs are rising at the same time.
This website saves on your device small data files known as cookies. These are divided into essential cookies and statistical ones. Essential cookies are always operational, as they allow use of the site and ensure data security.
The site does not use any cookies that identify the user.
Select ‘Approve cookies’ or click ‘Edit cookie settings’, read the additional information and tailor the cookies to your preferences.
Functional cookies
Essential cookies enable the website’s data security and basic functions such as navigating around the site and the search function. Essential cookies do not gather any data that can identify a user of the site.
Statistical cookies
Statistical enhancement cookies help us develop the site to meet users’ needs. They gather data on e.g. users’ terminals, site visits and time spent on the site. Statistical cookies do not gather any data that can identify the user.