International cooperation  

The Financial Stability Authority (FFSA) engages in active international cooperation in matters pertaining to resolution and deposit guarantee schemes. FFSA participates in several European bodies that prepare or develop European resolution or deposit guarantee schemes. Exercising influence through participation in these bodies is important for ensuring the effective functioning of the mechanisms. At the same time, it enables FFSA to strengthen its own competence development. 

FFSA acts as part of the second pillar of the banking union, i.e. the Single Resolution Mechanism. The mechanism consists of the Single Resolution Board (SRB), the Single Resolution Fund and the national resolution authorities, the FFSA thus being the authority in Finland. 

FFSA also works closely together with the deposit guarantee systems in other countries.

Read more about the deposit guarantee in Europe. 

The banking union protects financial stability in the EU 

The purpose of the banking union is to ensure that: 

• The banking sector in the euro area has common rules and is supervised in a uniform manner.
• The problems of banks in serious difficulties are addressed in a coordinated and effective manner. 
• The financial stability is maintained throughout the EU while enhancing the functioning of the internal market.
• In addition, the aim of the banking union is to reduce the interconnections between banks and governments.

The banking union is based on the EU’s harmonised regulation of the financial sector, which is referred to as the single rulebook. The key regulations concerning the banking union are related to capital and liquidity requirements for banks, risk management and processes, the protection of depositors and the resolution of banks. 

The banking union consists of the euro countries, but EU Member States that are not part of the euro area can also choose to participate in it. Since 2020, Bulgaria participates in the banking union.

The three pillars of the banking union

The decisions on establishing the banking union were made in the aftermath of the global financial crisis that began in 2008, amid the public debt crisis in Europe in the summer of 2012. 

The pillars of the banking union are as follows: 

1. The Single Supervisory Mechanism 
2. The Single Resolution Mechanism 
3. The European deposit insurance scheme 

The Single Supervisory Mechanism (SSM) became operational in 2014, followed by the Single Resolution Mechanism (SRM) a year later, in 2015. 

The Single Supervisory Mechanism is the responsibility of the European Central Bank (ECB), which is the supranational authority of the banking union. It works in close cooperation with the national supervisory authorities. The national supervisory authority in Finland is the Financial Supervisory Authority.  

The ECB directly supervises all significant and large banks in the euro area in close cooperation with the national supervisory authorities. The responsibility for the supervision of other banks lies with the national supervisory authorities. 

More information on the Single Supervisory Mechanism is available on the ECB website. 

The Single Resolution Board, SRB, is responsible for the common resolution mechanism. SRB is an independent EU agency based in Brussels. It is also responsible for the Single Resolution Fund (SRF). 

If the third pillar of the banking union – a European deposit insurance scheme (EDIS) – is implemented, the Financial Stability Authority will become part of EDIS. 

International cooperation on resolution

The FFSA’s key international cooperative body is its parent organisation, SRB. It is responsible for the planning and implementation of resolution concerning banking groups that are part of the ECB’s direct supervisory activities as well as multinational banking groups.

SRB works in close cooperation with the national resolution authorities as well as the European Commission and the European Central Bank’s bank supervision function.

Read more about the cooperation between SRB and FFSA in bank resolution.

The representatives of the Financial Stability Authority actively participate in the SRB’s committees and the various working groups under them. The SRB’s objective is to establish common policies and guidelines for the euro area concerning resolution planning and the management of crises.

The SRB’s Work Programme for the years ahead is available on their website.

The European Banking Authority (EBA) is another important cooperative body for the Financial Stability Authority in resolution-related matters. The FFSA participates in the EBA’s Resolution Committee and the permanent and temporary working groups therein concerning both resolution and deposit guarantee schemes.

EBA's work programme.  

Cooperation with the EBA is important because the scope of its activities covers the entire EU and its participants include representatives from all Member States, including those Nordic countries that are not part of the banking union. The operations in the Financial Stability Authority’s area of responsibility are subject to various guidelines, recommendations and standards issued by the EBA, which makes it especially important for the Authority to participate in its work.  

International cooperation pertaining to deposit guarantee schemes 

As Finland’s national deposit guarantee authority, the FFSA is closely involved in the work of the EBA’s Task Force on Deposit Guarantee Schemes and the working groups under it. The priorities of the EBA’s Task Force and its working groups include updating guidelines concerning deposit guarantee systems, assessing amendment needs concerning the Deposit Guarantee Scheme Directive and assisting the European Commission in the development of the Directive as well as developing and measuring the effectiveness and capacity of the deposit guarantee systems in the entire EU and the European Economic Area (EEA) by means of a uniform stress testing framework. 

In addition to cooperating with the EBA, the FFSA’s representatives actively participate in the committees and working groups of the European Forum of Deposit Insurers (EFDI) to share experiences and competencies as well as draft guidelines, reports and technical documents to support the operational development of deposit guarantee systems, for example. The Authority is also a member of the International Association of Deposit Insurers (IADI). The primary objective of the EFDI and the IADI is to promote the effectiveness of deposit guarantee systems as well as cooperation and the sharing of information, competence and experiences. 

The Deposit Guarantee Scheme Directive includes provisions concerning a cooperation obligation for deposit guarantee systems, particularly with respect to the payment of deposit guarantee compensation to depositors of a bank’s foreign branch, where the deposit guarantee system of the country the branch is located in is required to pay the compensation on behalf of the deposit guarantee system of the bank’s home country. 

Based on the cooperation obligation stipulated by the Directive, the EBA has issued guidelines on cooperation agreements between deposit guarantee systems, and the FFSA complies with these guidelines. In accordance with the guidelines, the EFDI and the EBA have also prepared the EFDI Home/Host Multilateral Agreement, which the FFSA has joined. The multilateral agreement establishes a framework for cooperation pertaining to the branches of banks.  

Multilateral cooperation is complemented by close bilateral cooperation, particularly with the deposit guarantee systems of those EU and EEA countries that host foreign branches of Finnish banks or whose banks have branches in Finland. With these countries, the FFSA concludes bilateral agreements particularly with regard to the practical arrangements related to the payment of compensation. 

EBA Guidelines on cooperation agreements between deposit guarantee schemes

EFDI Home/Host Multilateral Agreement

Cooperation in the Nordic and Baltic regions 

In the Nordic region, the FFSA engages in international cooperation in resolution colleges established for Nordic banking groups. The FFSA also engages in a significant amount of cross-border cooperation in deposit guarantee matters with the deposit guarantee systems of the other Nordic countries and the Baltic countries.  

The Financial Stability Authority also participates in the Nordic Baltic Stability Group (NBSG), which consists of government ministries, central banks and the supervisory and resolution authorities in the Baltic and Nordic countries. The region’s financial markets are interlinked in a manner that creates the need for the broad exchange of information and cooperation. The purpose of the cooperation is to promote financial stability and prevent the occurrence of financial crises in the region. As a rule, the group organises a comprehensive crisis simulation exercise every five years. 

Memorandum of Understanding between members of the Nordic Baltic Stability Group (pdf)