Assessment of financial stability

The Bank of Finland regularly assesses the stability of the domestic and international financial system and its resilience to serious risks and disruptions. The objective is to identify in good time risks and vulnerabilities that could threaten the stable functioning of the entire financial system. The analyses contribute to finding tools for preventing or mitigating systemic risks and for improving the resilience of the financial system. Such assessments support the work of the Bank of Finland and the Board of the Financial Supervisory Authority (FIN-FSA).

The Bank of Finland assesses the stability of the domestic and international financial system and the risks and disruptions to which it is exposed. The objective is to identify in good time risks and vulnerabilities related to the functioning and structure of the financial system that could threaten the stable functioning of the entire financial system.

In addition to the identification of risks, it is important to assess their possible transmission channels and the magnitude of their impact on the financial system and its various entities and customers. The analysis covers banks and other financial intermediaries, insurance companies, money and capital markets, households and companies, residential and commercial real estate markets and their interconnectedness.

The Bank of Finland also monitors the long-term trends and structural changes in financial system entities and the operating environment. The focus of analysis is on the impacts of digitalisation, cyber security and climate change on the financial system.

The Bank of Finland analyses the financial system's resilience to the risks and disruptions to which it is exposed. The risks may emerge in the financial system as credit and liquidity risks, investment risks or operational risks. The analysis also helps assess the measures taken and the possible new measures that may prevent or mitigate the materialisation of risks and strengthen the resilience of the financial system.

Financial stability is assessed regularly

The Bank of Finland publishes its financial stability assessment once a year. Bank of Finland experts also discuss topical issues in the area of financial stability in articles and blogs published by the Bank of Finland. The Bank of Finland publishes regularly statistics and risk indicators on the functioning of the financial system. The Bank of Finland also issues opinions and supports the development of financial regulation.

The Bank of Finland and the FIN-FSA publish a joint report on the macroprudential situation twice a year. It discusses, in particular, stability threats related to household and corporate indebtedness. The report is based on more extensive confidential assessments prepared quarterly by experts, which the Board of the Financial Supervisory Authority utilises in its macroprudential policy decision-making.

Assessments on financial stability and the threats to which it is exposed, as well as on the impacts of macroprudential policy measures, support the work and decision making of the Bank of Finland and the Board of the Financial Supervisory Authority. The purpose of the publications is to distribute information also to other authorities, financial system entities and the wider public, and promote discussion on financial stability.

The Bank of Finland focuses strongly on the development of quantitative analysis. The use of large datasets can be enhanced by utilising modern data analytics and developing and applying statistical models.