Bank of Finland prepares for potential financial system crises
In its activities both as part of the European System of Central Banks and at national level, the Bank of Finland prepares for crises in financial and payment systems by maintaining crisis readiness. The financial crisis highlighted how important it is that central banks have the capacity to respond instantly to any potential crisis situations.
In step with financial integration, international cooperation has become essential. Management of financial crises is a common concern and can, under no circumstances, be considered merely a national problem anymore. It is therefore vital that national authorities cooperate in the field of financial crisis preparation and management, reaching as broad advance agreement about operational policies as possible. EU and Nordic central banks, supervisory authorities and finance ministries have agreed on various Memoranda of Understanding (MoU) on mutual cooperation.
The Memorandum of Understanding on cooperation between the financial supervisory authorities, central banks and finance ministries of the European Union on cross-border financial stability entered into force on 1 June 2008. The objective of the MoU is to promote the financial stability of the EU and its member states by raising the readiness of financial supervisors, central banks and finance ministries for cross-border cooperation in the field of financial crisis management and preparation. This cooperation includes the exchange of information and status reports for crisis management purposes, coordination of public communication and crisis management drills.
In summer 2010, the ministries, central banks and financial supervisors of the Nordic countries and Baltic States agreed on cooperation to promote financial stability. This agreement makes participating countries better equipped to handle potential common financial stability problems in the Nordic and Baltic region. At the same time, the supervisory authorities of the participating countries set up a cross-border stability group, which is the first of its kind in Europe.
In signing this agreement, the Nordic and Baltic supervisory authorities were the first to implement the EU-wide MoU signed in June 2008 by all the EU member states, and requiring conclusion of regional or institutional agreements.