The key objective of macroprudential analysis is to identify severe imbalances that arise in or are amplified by the financial system and to assess the related risks and vulnerabilities.
The purpose of macroprudential analysis is to identify well in advance the risks to the operation or structure of financial institutions or markets – so-called systemic risks – the realisation of which could, at worst, lead to financial crises and intensify the macroeconomic impact of these crises. Systemic risk may arise e.g. from credit cycles, built-in structural features and vulnerabilities of the financial system, or
from problems of individual financial institutions that are of major systemic importance. Effective identification of risks requires continuous development of the macroprudential toolkit.
In addition to the identification of risks, macroprudential analysis and monitoring involves the assessment of the resilience of domestic and international financial institutions and financial market infrastructures to severe disruptions. Macroprudential analysis also focuses on the interconnectedness of various financial system participants and assessments of the importance to financial system resilience of the risks transmitted through these linkages.
In domestic macroprudential analysis, the Bank of Finland cooperates closely with the Financial Supervisory Authority and the Ministry of Finance, in particular. In the systemic risk analysis, it is essential to perceive the interlinkages between the real economy and the financial markets. The Bank of Finland has long experience and extensive competence in research into both the real economy and the financial markets. The Bank participates in international cooperation via the European System of Central Banks, and it also cooperates with other international organisations such as the European Systemic Risk Board (ESRB), the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).
An assessment of the domestic macroprudential situation – prepared jointly by Bank of Finland and FIN-FSA experts – is published as a separate report twice a year. The FIN-FSA Board utilises the results of the analysis in its decision-making on the adoption of macroprudential instruments. In addition to the report, the Bank of Finland's opinions on proposed macroprudential policy decisions and on most of the key figures and risk indicators in the macroprudential analysis are published on the Bank's website. In addition, studies, analyses and reports by the Bank's economists on macroprudential issues are published both in the Bank’s own publications and in international publications.