The Board of the Bank of Finland convened today, Sunday 15 March 2020, and took decisions on measures aimed at alleviating payment difficulties and liquidity shortages caused by the coronavirus pandemic and ensuring access to funding for households and businesses, particularly SMEs. The decisions were prepared in cooperation with the Government and key authorities, and in dialogue with the financial sector. They complement the decisions taken earlier by the Governing Council of the ECB to support favourable liquidity conditions and preserve the smooth provision of credit in the euro area.
The Bank of Finland assesses, in close cooperation with national, European and Nordic authorities, the stability of the financial system and, in particular, developments in financial intermediation. The purpose is to facilitate the ability of credit institutions to provide funding to businesses and households and to mitigate the negative economic impact of the pandemic. The Board of the Financial Supervisory Authority (FIN-FSA) has started work on an immediate review of the level of capital requirements that are subject to national decision-making.
In 2009–2018, the Bank of Finland invested in the domestic corporate paper market. This investment activity was discontinued as market volumes shrank, reflecting the decrease in funding needs of businesses. Recent events have weakened the ability of markets to function and increased the funding needs of businesses. The Bank of Finland has therefore decided to restart its activities in the domestic corporate paper markets. The size of the programme is initially EUR 500 million.
“We need rapid and effective measures to safeguard funding conditions for businesses, preservation of jobs and households’ ability to cope with the pressures caused by the coronavirus pandemic. The Bank of Finland is preparing a crisis package of measures within its mandate, in cooperation with the Government. Our decisions are in line with decisions taken at the European and international level,” noted Bank of Finland Governor Olli Rehn.
On 12 March 2020, the Governing Council of the ECB decided on a comprehensive package of monetary policy measures. The decisions are aimed at ensuring adequacy of liquidity for banks and supporting favourable financing conditions for the real economy. Banks will be able to borrow under the new and existing longer-term refinancing operations on very favourable terms. In addition, the ECB decided to add a temporary envelope of additional net asset purchases amounting to EUR 120 billion by the end of the year. “The latest decisions by the ECB constitute a comprehensive and effective package of measures. The decisions by the ECB support liquidity conditions and ensure access to credit for households and businesses in the euro area and also in Finland,” emphasised Governor Olli Rehn.
For further information, please contact Head of Communications Jenni Hellström, tel. +358 9 183 2632.