The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.

An integrated European banking market can be seen as an ultimate objective of the Europe’s banking union project. The recent initiative to reduce home bias in banks’ sovereign debt exposures aims to support these goals.

Lowering the loan cap will mitigate household indebtedness and strengthen mortgage borrowers’ risk resilience. It will not, however, remove the risks relating to the record-high level of indebtedness.

A single European Deposit Insurance Scheme would reduce the risk of deposit runs.

Single deposit insurance is an important part of the completion of Banking Union. The deposit insurance fund needs to be sufficiently large to credibly withstand possible problem situations. Banks’ deposit insurance contributions should be calibrated based on risks.

The bank-sovereign nexus has weakened, but we cannot consider it to be broken.

There are no immediate threats to the stability of the Finnish financial system. The relocation of Nordea’s corporate headquarters will, however, increase the banking sector’s exposure to structural vulnerabilities.

Under the European Deposit Guarantee System proposed by the European Commission, responsibility for guaranteeing deposits would be gradually transferred from national level to the new system.