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.
Financial integration has made international cooperation in crisis management-related matters 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.
As of 2016, the Single Resolution Mechanism (SRM) for countries participating in banking union assumed responsibility for the restructuring and winding-up of participating Member States’ unviable banks. The Bank of Finland has no direct membership in the decision-making bodies of the SRM. Instead, the Bank participates in developing crisis management via its statements and expertise.
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 this MoU is to promote the financial stability of the EU and the 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 authorities of the participating countries set up a cross-border stability group, the first of its kind in Europe. The agreement signed in 2010 was replaced bya new Memorandum of Understanding in January 2018.
The Memorandum of Understanding between the Nordic and Baltic central banks on cooperation to support financial stability, and on information sharing about cross-border financial institutions entered into force in December 2016.