Press release 7 December 2016

IMF country assessment: Finnish financial system stable, supervision intensity stepped up

According to the most recent country assessment conducted by the International Monetary Fund (IMF), the Finnish financial system remains well capitalized and profitable, notwithstanding the long period of recession. Stress tests suggest that banks are largely resilient to solvency shocks, but exposed to liquidity risks. 

​The IMF also draws attention to the rising levels of household debt given the weak economic conditions. This has made them more vulnerable to further deterioration in the economic situation or rising interest rates. The close interlinkages between Nordic financial systems also constitutes a risk if serious financial sector problems emerge in another Nordic country.

The insurance sector faces the particular challenge of a potentially prolonged period of low interest rates.

The IMF encourages the Finnish authorities to ensure that banks maintain adequate capital and liquidity buffers. To safeguard the capital adequacy position, risk weight floors should be set for housing loans. As regards liquidity, the IMF mentions the need to maintain adequate liquidity in case of emerging imbalances. Among other things, the IMF draws attention to the large amount of external or foreign exchange-denominated wholesale funding and to crossholdings of covered bonds.

The IMF refers to banking, insurance and fund supervision, as well as macroprudential supervision, as areas which have become more intensive, intrusive and resource-intensive. According to the IMF, the FIN-FSA should be granted broader powers, especially in the field of macroprudential supervision.

In light of Nordea Finland's likely conversion to a branch of the Swedish parent, the IMF focuses special attention on the supervision of systemically important branches and encourages supervisors to strengthen supervisory cooperation. The IMF also refers to the problem of insufficient EU legislation in situations where significant branches hold a large market share.

For further information, please contact

Marja Nykänen, Deputy Director General​

Requests for interviews

FIN-FSA Communications, tel. +358 50 385 5154


IMF press release and IMF country report (pdf)
Finland: Selected Issues (pdf)
Finland: Financial System Stability Assessment (pdf)