## Finland: Financial Sector Assessment Program: Technical Note-Banking Supervision

_IMF Staff Country Reports, January 11, 2017_

## Source details

**Canonical URL:** [Finland: Financial Sector Assessment Program: Technical Note-Banking Supervision](https://www.imf.org/en/publications/cr/issues/2017/01/11/finland-financial-sector-assessment-program-technical-note-banking-supervision-44513)

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## Bibliographic details
- Published: January 11, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781475564747.002

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### Overview and purpose
- Publication date: January 11, 2017
- Pages: 57
- Volume: 2017
- Issue: 003
- Series: Country Report No. 2017/003
- DOI: https://doi.org/10.5089/9781475564747.002
- Stock No: 1FINEA2017001
- ISBN: 9781475564747
- ISSN: 1934-7685
- This Technical Note discusses the findings and recommendations made in the Financial Sector Assessment Program (FSAP) for Finland in the area of banking supervision.

### Key findings on liquidity and funding risk
- The regulatory and supervisory framework for liquidity and funding risk has improved since the last FSAP.
- Certain vulnerabilities persist and require greater attention.
- Finnish banks continue to rely extensively on wholesale funding, as noted in the 2010 FSAP.
- Many banks remain heavily exposed to the risk of a dry-up of unsecured wholesale funding despite supervisory efforts to mitigate the problem.
- Banks hold covered bonds issued by other banks as part of their liquidity buffer.

### Supervisory actions and assessments
- Supervisory action has managed to mitigate the wholesale funding problem to some extent, but significant exposure remains.
- The note evaluates aspects of the FIN-FSA in relation to bank supervision, including references to FIN-FSA approach, FIN-FSA budget, FIN-FSA independence, FIN-FSA report, FIN-FSA resource, FIN-FSA staff, FIN-FSA standard, FIN-FSA's Board, and the supervisor-bank dialogue.

### Risks and vulnerabilities highlighted
- Continued extensive reliance on wholesale funding creates material exposure to market disruptions (a potential dry-up of unsecured wholesale funding).
- Use of covered bonds from other banks in liquidity buffers presents interconnectedness and credit risk considerations.

### Thematic subjects and keywords covered
- Subjects: Bank supervision, Banking, Covered bonds, Credit risk, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Financial stability assessment, Liquidity requirements, Loans
- Keywords: Bank supervision, Covered bonds, CR, credit risk, Credit risk, Europe, FIN-FSA approach, FIN-FSA budget, FIN-FSA independence, FIN-FSA report, FIN-FSA resource, FIN-FSA staff, FIN-FSA standard, FIN-FSA's Board, Financial stability assessment, Global, ISCR, Loans, Reinforce FIN-FSA independence, supervisor-bank dialogue

*International Monetary Fund. Monetary and Capital Markets Department "Finland: Financial Sector Assessment Program: Technical Note-Banking Supervision", IMF Staff Country Reports 2017, 003 (2017).*

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_Source: https://www.imf.org/en/publications/cr/issues/2017/01/11/finland-financial-sector-assessment-program-technical-note-banking-supervision-44513_