The Bank of Finland’s operations and strategy
1.2 Bank of Finland strategy updated in 2020
The Bank of Finland updated its strategy in 2020. This was part of the broader Vision 2030 project. The new strategy will ensure that the Bank of Finland is able to achieve its objectives despite changes in the operating environment.
The Bank of Finland updated its strategy in 2020. In connection with the update, the Board defined the focal points guiding implementation of the new strategy.
The Bank of Finland’s mission statement: to build a sustainable economy and stability
The Bank of Finland’s mission statement encapsulates the purpose of our work and answers the question: ‘What does the Bank of Finland do?’
Our new mission statement is ‘The Bank of Finland builds a sustainable economy and financial stability’. This is rooted in the Act on the Bank of Finland and on the Bank’s position as a national central bank and member of the Eurosystem.
The mission statement is complemented by the following summary of the bank’s core functions. These are:
- to maintain price stability
- to foster the stability of the financial system
- to provide for the efficiency and security of the payments system
- to support sustainable growth and high employment in Finland and the EU.
Scenario work was used to construct alternative vistas of the future
The update of the Bank of Finland strategy began with a careful analysis of the operating environment. The purpose of this scenario work was to anticipate how the Bank’s operating environment would change during the 2020s.
The result was three alternative comprehensive depictions of the operating environment in 2030. These are influenced by a number of different trends and factors of uncertainty, the potential effects of which were considered during the project.
We did not calculate probabilities for the various scenarios, as they were done simply to illustrate alternative development trends for the operating environment and the causal relationships between events. The scenario work involved input from a large number of experts from different fields within the Bank.
The first scenario is ‘A strengthening currency union’. In this scenario, the pandemic shakes the EU, but at the same time it strengthens the will for cooperation in, for example, trade policy and environmental issues. From a central bank perspective, this scenario means, among other things, an intensification of macroprudential policy.
The second scenario is ‘Self-sufficient islets’. The point of departure for this is a global depression that erodes international cooperation and causes countries to turn in on themselves. Heavy debt accumulation and increased uncertainty lead to a weakening in the effectiveness of central bank policies and other economic policies.
The third scenario is ‘Breakthrough of the digital economy’. Here, the economy recovers swiftly from the pandemic with the help of digitalisation. Price pressures grow, payment methods fragment and supervision of the financial markets becomes increasingly challenging for central banks and other regulatory authorities.
These scenarios were drawn on in the Bank of Finland’s strategy work by considering what the Bank’s opportunities, risks and strategic alternatives would be in the operational environment of each scenario.
Principles show the way to the goal described in the vision
The vision serves as a compass that indicates the long-term goal. According to the Bank of Finland’s vision, ‘the Bank of Finland is an efficient and respected central bank that maintains price and financial stability under all circumstances to achieve the wellbeing of all citizens’.
The vision has been broken down into nine operational principles, which indicate how we can achieve the goal described in the vision. These will stand the test of time and are important for all the activities of the Bank of Finland.
The first part of the vision, the Bank of Finland’s efficiency and position as a respected central bank, is supported by the first three guiding principles:
- We generate added value by our expertise, insightful solutions and confidence-building cooperation.
- We base our positions and decisions on knowledge, research and high-quality analysis.
- We participate in social debate, reach our stakeholders and engage in constructive dialogue both domestically and within the Eurosystem.
Maintaining price and financial stability under all circumstances demands of a central bank efficiently produced central banking services for the surrounding society, readiness for unexpected eventualities and the ability to anticipate. These factors are to the fore in the next three principles:
- We provide progressive and reliable central banking services to meet the changing requirements of Finnish society.
- We ensure the continuity of operations by preparing for situations of change, disruption and crisis.
- We develop our expertise and working practices with a view to the long term and anticipating the needs of the future.
The final part of the vision emphasises the Bank of Finland’s role as a national institution that carries out work of importance for the whole of society. In addition to basic functions, the aim is to enhance public awareness of economic issues and engage in constructive social debate.
- We operate responsibly and in accordance with the principles of sustainable development.
- We carry out our tasks efficiently and economically, maintaining a stable distribution of profits to the State without endangering our capital adequacy.
- We foster public awareness of the economy, the Bank of Finland and the Eurosystem by distributing comprehensible information.
The Bank of Finland’s values emerged collectively
The Bank of Finland’s values serve as guiding principles in the overall strategy and indicate how Bank staff work together and the foundational principles our choices are based on.
The Bank of Finland’s values emerged from a collective effort, as the value journey organised to develop them involved the entire staff of the Bank.
‘We Bank of Finland staff
are constantly learning individually and from each other,
we value the expertise of each of us,
we work together and as equals,
we bear responsibility for the construction of a sustainable economy and stability.’
The strategic foci for the operational planning period 2021-23 guide our everyday work
The Bank of Finland’s new strategy is complemented by the strategic foci selected by the Board. These will guide daily implementation of the strategy for the entire operational planning period 2021-23.
- Assessment and solutions for the impacts of the COVID-19 crisis.
The Bank of Finland assesses the impacts of the COVID-19 crisis on the economy, monetary policy and its implementation, financial stability and payments. Additionally, the Bank provides extensive support for our staff’s capacity to work during the prolonged pandemic.
- Contribution to re-evaluating and updating the ECB’s monetary policy strategy.
The Bank of Finland participates actively and extensively in preparation of the monetary policy strategy update and supports our Governor’s opportunities to exert influence on the process.
- Preparation of the Eurosystem’s central bank digital currency.
Bank of Finland experts participate in settlement work on the common Eurosystem central bank digital currency.
- Managing and influencing through knowledge.
At the Bank of Finland we are updating our management system by, for instance, developing processes and tools and expanding the data base used in management.
- Influencing domestic economic policy and promoting financial literacy.
The Bank of Finland participates in domestic debate at those stages of preparation and decision-making where we have expertise, based for example on research or international experience. Moreover, the Bank of Finland coordinates activities relating to households’ financial literacy and is also planning a longer-term national model for this work.