Financial market report 2/2011

Abstract

1 Financial intermediation 4 1.1 Finnish companies prepared for a weakening financial situation 4 1.2 IMF's Financial Soundness Indicators - a rich databank 7 1.3 Uncertainty hampers financial intermediation 9

2 Banks and insurance corporations 12 2.1 Recapitalisation of banks - one of the key measures for restoring confidence 12 2.2 Limited investments by Finnish investors in debt securities of euro area periphery countries 14

3 Securities markets 17 3.1 Narrower definition of European money market funds 17 3.2 Expanding market for exchange traded investments funds 20

4 Infrastructure 22 4.1 Payment systems - the economy's circulatory system 22 4.2 More delays in payment flows 23 4.3 Retail payment services not profitable for banks 24

5 Key regulatory and supervisory initiatives 26 5.1 Systemically important banks to face tighter requirements 26 5.2 Efforts at maximum harmonisation hamper preparation of EU capital adequacy regulation 29 5.3 European Systemic Risk Board's first recommendation deals with foreign currency loans 31