Economic policy in Finland must find a way to live in two time periods at once. While we are currently combating an acute crisis, we must at the same time direct our thinking strongly towards the economic challenges of the post-crisis years.

On 24 November, Bank of Finland hosted a webinar focusing on monetary policy challenges both in the euro area and in the United States.

In the short term, the main uncertainty is how fast India recovers from the pandemic.

The euro area economy contracted 15% in the first half of the year. Rapid and powerful economic policy measures have mitigated the damage caused by the pandemic, but there is still substantial uncertainty and recovery will take time.

The corona pandemic has seriously weakened the euro area economy and the outlook remains uncertain. Recovery will be affected by e.g. how successful the balance between the virus and the economy turns out to be, and how quickly confidence improves.

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.