Engagement and cooperation
The Bank of Finland’s influence is based on expertise and research. The Bank participates in social debate and promotes financial literacy in Finland.
The ultimate objectives of the Bank of Finland’s statements relating to economic policy are price stability, balanced economic growth and financial stability.
In 2020, our statements on domestic economic policy were largely related to the economic impacts of the COVID-19 pandemic.
The statements emphasised the need both to react strongly and rapidly to the acute crisis and to strengthen the longer-term outlook for the economy and the public finances.
The COVID-19 pandemic increased the need for reforms
When the pandemic broke out, the Bank of Finland emphasised that the role of economic policy was to assist households and businesses through the worst of the crisis.
The ECB’s monetary policy was strongly accommodative, and the financial system was able to operate without major problems.
In addition to measures within the single monetary policy in the euro area, the Bank of Finland strengthened the functioning of the Finnish financial market through national measures.
Without swift and extensive economic policy measures, the economic damage caused by the pandemic would have been considerably greater.
The COVID-19 pandemic serves as a reminder that healthy public finances provide an irreplaceable shield when we hit hard times.
The pandemic made forecasting more difficult
The Finnish economy contracted exceptionally sharply in 2020. Economic forecasts were dominated by the COVID-19 pandemic and the related remarkably high degree of uncertainty.
In April, the Bank of Finland exceptionally published two alternative scenarios for the Finnish economy for the immediate years ahead. The economic ramifications of the pandemic would depend on how rapidly the virus can be contained and restrictions be lifted in Finland and other countries.
The December forecast suggested that the Finnish economy would recover, albeit slowly. While the recession caused by the pandemic had remained milder than feared, it would weaken the conditions for economic growth.
In 2020, in addition to macroeconomic forecasts, the Bank of Finland began publishing interim forecasts twice a year. The interim forecasts present the outlook for GDP, inflation and employment rates.
Bank of Finland research supports the ECB’s monetary policy strategy review
International cooperation is an important part of the Bank of Finland’s work.
We participate in the work of international and European institutions and committees and cooperate closely with the national central banks of other countries.
In 2020, the ECB launched a review of its strategy. Research conducted at the Bank of Finland has significantly contributed to the analysis underlying the strategy review.
The Bank’s research topics were also influenced by the COVID-19 pandemic. Economic policy issues raised by the pandemic were discussed in literature reviews and analyses.
The Bank of Finland’s key research areas in 2020 were monetary policy, macroprudential policy, the macro economy and emerging economies.