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. FFSA also works closely together with the deposit guarantee systems in other countries.
FFSA as part of the Banking Union's Single Resolution Mechanism
FFSA acts as part of the EU's Banking Union, i.e. the Single Resolution Mechanism. The mechanism consists of the Single Resolution Board (SRB), the Single Resolution Fund (SRF) and the national resolution authorities, the FFSA thus being the authority in Finland.
Read more about the cooperation between SRB and FFSA in bank resolution.
The objective of the Single Resolution Mechanism is to ensure that the actions and decision-making of the banking union’s resolution authorities are as consistent as possible, and that all banks operating within the banking union are treated as similarly as possible, regardless of the Member State in which they are located.
The decision-making procedure of the banking union’s Single Resolution Board (SRB)
SRB convenes in two compositions: Executive Sessions and Plenary Sessions. Executive Sessions are attended by the Chair, the Vice-Chair (as a non-voting member when the Chair is in attendance) and the four full-time Board Members of the SRB. The Executive Session drafts and, where possible, issues all decisions concerning resolution. It also makes all decisions concerning the SRB’s operational activities. When the SRB deliberates on the resolution of a specific bank, a representative of the national resolution authority of the Member State in question is invited to participate in the decision-making.
Plenary Sessions are attended by the members who attend Executive Sessions as well as the representatives of the national resolution authorities from all of the members of the banking union. Plenary Sessions discuss matters that are not related to resolution and decide on the use of the Resolution Fund’s assets whenever a proposal is made to spend more than five billion euros of assets from the Fund. Finland is represented in Plenary Sessions by the Director General of the Financial Stability Authority.
The representatives of the FFSA 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.
EU's Financial Supervision System
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.
A significant role in the implementation of the EU’s harmonised financial sector regulation is played by the European System of Financial Supervision, which consists of the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), the Anti-Money Laundering Authority (AMLA), and the European Systemic Risk Board (ESRB).
The FFSA participates in the EBA’s Resolution Committee and the working groups therein. 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. In addition, the FFSA participates in the work of ESMA's resolution committee handling the resolution of central counterparties for the derivatives market.
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 therein. 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.
International cooperation pertaining to deposit guarantee schemes
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 FFSA 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.
Read more about the deposit guarantee in Europe.
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)