Monetary accommodation has opened up space for other economic policies in the euro area, which needs to be put to good use by pursuing economic reforms. Productivity and employment growth ultimately rest on our ability to reform.

In recent years central banks have eased monetary policy by conducting large-scale asset purchases and offering banks credit on affordable terms. These measures promote price stability and facilitate economic growth and employment.

The Bank of Finland grants credit against collateral to Finnish banks. During the pandemic, credit operations have facilitated bank lending to businesses and households, and their uptake has been record-high.

In order for banks to obtain credit from the central bank, collateral is required. Collateral protects the central bank against risk. The ECB and Bank of Finland have eased their collateral requirements during the coronavirus pandemic.

Recent changes in the implementation of monetary policy have strongly expanded the balance sheets of the Eurosystem central banks. At the same time, balance sheet risks have increased.

Financial markets provide clues on the state of the economy and financing conditions. Crises emphasise the importance of market surveillance, as emerging problems in the economy and financial system are often first seen in markets.

Asset purchases have become an integral part of conducting monetary policy. The Bank of Finland implements the Eurosystem’s purchase programmes in Finland. Asset purchases lower interest rates in markets.

In Finland monetary policy is implemented by the Bank of Finland. Central banks have traditionally conducted monetary policy through interest rates. These days, they stimulate the economy by lending to banks at favourable terms and purchasing securities.