International cooperation is an essential aspect of the Bank of Finland’s activities, and its significance continues to mount.
The Bank of Finland’s most notable form of international cooperation is the Bank’s membership of the European System of Central Banks and the Eurosystem, in particular. More details on these can be found in the sections dealing with the Bank of Finland and its status and the Eurosystem.
Other fora for international cooperation are EU committees, the International Monetary Fund (IMF), the Bank for International Settlements (BIS) and the OECD. The Bank of Finland is also engaged in close cooperation with the central banks of several countries, especially those of the Nordic countries.
International Monetary Fund (IMF)
The Bank of Finland is responsible for representing the Finnish Government at the International Monetary Fund (IMF). The Bank of Finland’s Governor is Finland’s representative on the highest governing body of the IMF, the Board of Governors. Finland has been a member of the IMF since 1948.
The IMF is a financial institution tasked with promoting the stability of the international financial system. Each year, the IMF drafts a report on economic developments and economic policies in each of its member countries, including Finland. It can also make broader assessments concerning the financial system. In addition, the IMF can provide short-term loans to member countries experiencing balance of payment problems. Such financial assistance is conditional on an economic adjustment programme.
Responsibility for IMF’s operative activities is vested in the Executive Board, on which each member country is represented via a constituency. Finland is part of a constituency formed by the Nordic and Baltic countries. The Nordic-Baltic constituency’s joint body is the Nordic-Baltic Monetary and Financial Committee, composed of representatives from the central banks and finance ministries of the countries in the constituency.
Finland’s relations with the IMF’s sister organisation – the World Bank – is the responsibility of the Ministry of Finance.
Bank for International Settlements (BIS)
The Bank of Finland is one of the shareholders in the Bank for International Settlements (BIS). The BIS was established in 1930, and is the oldest still-operating international financial institution in the world. Juridically, the BIS is an international organisation and a joint-stock financial institution. The shareholders are, in general, central banks.
The Bank of Finland’s Governor participates in the BIS’s regular meetings, at which issues related to monetary and economic policy as well as the international financial system are discussed.
The BIS is the forum in which central banks cooperate to pursue the objective of promoting international monetary and financial stability. Central bank cooperation is close in the fields of financial market supervision and regulation. Among the BIS committees, the most important ones are the Basel Committee on Banking Supervision established to intensify cooperation between financial supervisory authorities, and the Financial Stability Board.
EU committees
The Bank of Finland participates in the Economic and Financial Committee and the Economic Policy Committee, both of which fall within the aegis of Ecofin, the EU’s Council composed of Economic and Finance Ministers. The committees contribute to the preparation of meetings of the Ecofin Council and the Eurogroup of finance ministries, and take care of other tasks assigned by Ecofin. The Economic Policy Committee’s main concern is with questions related to structural policies.
The Economic and Financial Committee comprises two representatives from each Member State. One of these is from the economics or finance ministry of the respective country, the other from the country’s central bank. In addition, the committee has a representative from the ECB and one from the European Commission. The Bank of Finland also has representation on certain other EU committees, such as the General Board of the European Systemic Risk Board (ESRB).
Organisation for Economic Cooperation and Development (OECD)
The OECD was formed in 1961 as a cooperative organisation for industrialised countries. Finland became a member in 1969. Today the OECD has 35 members, the most recent of which –Chile, Israel, Slovenia and Estonia – joined the organisation in 2010. Finland’s relations with the OECD are the responsibility of the Ministry for Foreign Affairs.
The Bank of Finland has representation on the OECD’s Economic Policy Committee and Financial Markets Committee, for example. The monitoring and assessment of individual member countries and their economic policies is the responsibility of the Economic Development and Review Committee. A regular country review and related report form part of the committee’s work.