The aim of the loan cap is to rein in household indebtedness and prevent housing price bubbles. Finland badly needs other instruments that can also restrict indebtedness.

The systemic risk buffer is an additional capital requirement that can bolster Finland’s structurally vulnerable banking sector.

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.

Regulatory reforms and macroprudential measures have improved the risk resilience of the bank-centred EU financial system. Work has also begun on targeting stability risks building up beyond the banking system.

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

Growing household debt and the changing structure of the banking system are increasing the vulnerability of the financial system.

The European Systemic Risk Board (ESRB) has issued a warning to Finland concerning the vulnerabilities related to household indebtedness and lending for house purchase. There are, however, no threats to the stability of the Finnish financial system in the short term.

Finland’s financial system has functioned without serious problems during the difficult economic situation of recent years. However, the concentrated and interlinked nature of the financial sector means that the consequences of a financial crisis could be extremely serious for Finland.