In terms of the economy, the year was marked by an exceptional degree of uncertainty. After the fragile recovery that had prevailed for a couple of years, the economy took a downturn towards recession at the end of the year. Despite showing signs of recovery, the world economy was shaken by the social unrest that flared up in several Arab countries in the early part of the year, the nuclear and natural catastrophes that befell Japan and the political disputes in the United States regarding federal borrowing. In the second half of the year, the debt problems of a number of southern European countries had a negative effect on the economic development of the euro area.
In April and July, the ECB raised its interest rates, as euro area inflation accelerated. However, the rapid weakening of the economic outlook in the summer and the spread of the sovereign debt crisis through the euro area demanded new and determined measures of the monetary policy. In the summer the ECB activated its Securities Markets Programme and at the end of the year implemented two measures to reduce its policy rate. On top of which, bank liquidity was supported by credit operations with no less than three-year maturity.
Strong monetary policy measures have added to central banks' risks. For this reason, risk management has been considerably tightened at the Bank of Finland and in the entire Eurosystem. The Bank of Finland has augmented its balance sheet risk buffers to secure its capital ratios and secured its possibility to distribute a share of the Bank's profits so as to be steadily available for the needs of the State in the future, too.
The Bank of Finland's profit for financial year 2011 totalled EUR 254 million. The Bank's financial statement is published as part of the Annual Report.
For further information, please contact:
Mika Pösö, Head of Communications, tel. +358 10 831 2632.
