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The IMF provides a favourable assessment of Finland’s preparedness for financial crises

Publication date 1.2.2023 14.00
Press release

On 23 January 2023 the International Monetary Fund (IMF) published its assessment of Finland’s preparedness for financial crises and its ability to manage crises in the banking sector. The technical notes behind the assessment which consider bank resolution and deposit guarantee on a more detailed level were published on 1 February 2023. The IMF finds the situation satisfactory, but still sees a need to strengthen and operationalise the arrangements to be employed in connection with crisis management.

According to the IMF, cooperation between the national financial market authorities should be tightened even further, and preparation for problem situations should be tested by means of simulations. The IMF considers it important that the authorities have sufficient resources and that their independence is guaranteed. It also thinks that it is vital to ensure that the Deposit Guarantee Fund is pre-financed adequately.

The IMF is of the view that the Financial Stability Authority (FFSA) should publish more information about the various stages involved and measures taken when resolution tools are implemented in a resolution situation. The IMF furthermore stresses the importance of greater transparency of the methods applied in assessing the barriers hindering the implementation of resolution (impediments to resolvability). 

IMF recommendations noted in the FFSA’s preparedness work 

The FFSA is of the opinion that many of the IMF’s recommendations has already been taken into account in its work. Cooperation among authorities made closer by the last year’s crises continues to be good, and the need to develop further and test crisis management capacity has been identified among the authorities. As regards the transparency of the stages and measures involved in the deployment of resolution tools, the European Banking Authority (EBA) is in the process of finalising its instructions according to which the resolution authority will have to publish a description of how the bail-in mechanism would work by the end of 2023. As in many other matters, the FFSA makes use of the method developed by the Single Resolution Board also when assessing impediments to resolvability. The method will be made known to the banks as part of the resolution planning work. With respect to publicising the method, the FFSA will adhere to the principles applied by the SRB.

Based on the stress test conducted in accordance with the EBA’s instructions, the FFSA believes that the Deposit Guarantee Fund has sufficient assets. It is also worth noting that the effects of any payment of compensation from the deposit guarantee scheme on other banks in the form of deposit guarantee fees is accounted for, in accordance with the SRB’s method, in the assessment of the public interest, which determines the necessity of resolution to achieve the resolution goals. The evaluation method for the public interest assessment and the potential to use assets in the Deposit Guarantee Fund in connection with resolution are some of the issues discussed in the review of the EU’s Crisis Management and Deposit Insurance (CMDI) framework. Some of the IMF’s recommendations will therefore have to be reviewed again when the European Commission has announced its CMDI proposal in spring 2023.

The IMF’s assessment of Finland’s preparedness for financial crises is based on discussions with authorities, banks, insurance companies and other financial institutions. During the process that started in the end of 2021, the IMF on several occasions also visited the FFSA. The FFSA would like to thank the IMF representatives for the interesting and instructive discussions and their recommendations, which will help further improve the work of the FFSA.

IMF main report: Finland: Financial System Stability Assessment
IMF technical note: Finland: Financial Sector Assessment Program- Technical Note on Crisis Management and Resolution

More information: the FFSA’s Chief Economist Hanna Westman (forename.surname(at)

Press release