IMF Reports on 2019 Article IV Consultation with Finland and Estonia
IMF published reports under the 2019 Article IV consultations with Finland and Republic of Estonia. These IMF reports assess, among other areas, the soundness of financial sectors in these countries. The IMF assessment shows that banking systems in both Estonia and Finland remain healthy and well-capitalized.
Staff and selected issues reports on Finland. The financial system is sound, with the banking system being well-capitalized and profitable. However, extra measures are needed to address vulnerabilities of borrowers. While Finnish banks are highly exposed to real estate, residential and commercial real estate markets are not obviously overvalued. The recent recommendation to limit the ratio of household debt to income (DTI) is in line with the steps taken in many other countries. A government appointed working group has recommended a comprehensive cap on the DTI ratio, limits on the indebtedness of housing companies, and shortening the maximum maturity of mortgages and housing company loans. The assessment concludes that additional steps could be taken to address financial risks, especially those associated with the increase in housing company and consumer loans. Moving forward to establish the planned comprehensive positive credit registry and stepping up data collection on loans from outside credit institutions is important to limit the possibility of cheating by loan applicants and would also help to assess the increase in consumer credit from the increase in “peer-to-peer” and other non-bank loans. Replacing the loan-to-collateral ratio for mortgage loans by a loan to value cap would further strengthen the macro-prudential toolkit.
Staff and selected issues reports on Estonia. In Estonia, the banking sector is sound, non-performing loans have been low, liquidity coverage ratios are above the regulatory minimum requirements, and banks have ample capital buffers. Macro-prudential policies are appropriate and risks are contained, but continued monitoring is warranted. Directors underscored that macro-prudential policies should contain financial-sector risks that could arise from the low interest rate environment. They encouraged the authorities to continue to monitor broader macro-financial developments, especially real estate and housing related risks, while enhancing the macro-prudential toolkit and standing ready to act, should risks materialize.
Related Links
- Staff Report on Finland
- Selected Issues Report on Finland
- Staff Report on Estonia
- Selected Issues Report on Estonia
Keywords: Europe, Finland, Estonia, Banking, Article IV, Macro-Prudential Policy, Macro-Prudential Tools, Systemic Risk, NPLs, IMF
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
HKMA and BOT Publish Outcomes of Joint Research Project on CBDCRelated Articles
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
HKMA Announces Repayment Deferment Under Payment Holiday Scheme
HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.
ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal
The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.
MAS Announces Key Initiatives to Support Adoption of SORA
MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
PRA to Extend Temporary High Balance Coverage Amid COVID Crisis
PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.
EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC
EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.
EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10
EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.
EC Sets Out Updated Technical Information for Solvency II Calculations
EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.
