Kimmo Koskinen

Negative interest rates have been an integral part of the ECB's overall monetary accommodation for just over five years now. Research indicates that the advantages of slightly negative interest rates outweigh the disadvantages.

Consumer credit can drive households into financial difficulties. New measures are needed to prevent increasing debt problems.

Foreign investment in the Finnish and other Nordic property markets has increased. As a consequence the Finnish market is more vulnerable to external risks.

Investment in IT will improve banks’ long-term profitability, while weakening short-term profitability.

An extensive materialisation of risks on the Swedish housing market could also have notable effects in the other Nordic countries.

Low risk premia and high valuations have increased global securities markets’ exposure to price corrections and abrupt shifts in risk premia.

The Finnish real estate investment market is lively and large in proportion to the size of the economy, foreign investment and high valuations may expose the Finnish market to economic shocks from abroad. The risks may reflect on banking particularly via lending.

When indebted households cut their spending during an economic downturn, this also increase the financial difficulties of non-financial corporations.

Finns are among the leaders in Europe in the use of digital financial services. Nordic banks have invested in digital services.

Finnish household debt is rapidly increasing also via consumer credit. Loans taken out from these new sources is difficult to monitor.

Investors’ optimism on the financial markets can rapidly turn to risk aversion if global economic or political uncertainty increases.

The uncertainty surrounding the outlook for global growth in general has also focused strongly on the banking and finance sectors, which are particularly sensitive to changes in the economic cycle.

Realisation of potential housing market risks would simultaneously increase loan and investment losses while also pushing up the price of funding.

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.

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

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