Macroprudential toolkit should be replenished in Finland and Europe

Abstract

Finland and the EU have now gained almost a decade of experience in macroprudential policy. Banks’ risk resilience has been increased, and the supply of credit has been relatively stable even in crisis situations. Disruptions threatening stability may emerge both within and outside the financial system. The macroprudential toolkit should include a higher amount of releasable capital buffers to be used by banks in the event of disruptions. Macroprudential authorities should have more effective and uniform instruments at their disposal to address housing market risks and excessive growth in household indebtedness. The macroprudential toolkit should be further improved both at EU level and in Finland.