2020 will go down in history as the year of the COVID-19 pandemic that ravaged the whole world and also tested the durability of our society here in Finland. Many Finns have lost their jobs and many companies have experienced great difficulties.

During the COVID-19 crisis economic policymakers have had to be able to respond rapidly and introduce strong measures. Without substantial stimulus measures, the economic carnage would have been considerably worse.

The Bank of Finland has been in the front line in combatting the damage to the economy from the virus. In March 2020, the COVID-19 pandemic hit the economy with full force. This led to a tightening of financial conditions and raised the danger of a new financial crisis. In the acute crisis situation we launched support purchases on the market for Finnish commercial papers and decided together with the Financial Supervisory Authority to ease the terms and conditions of bank finance.

In the ECB Governing Council we decided to commence pandemic-related securities purchases in order to further ease monetary policy so as to stimulate the economy. These will continue until the pandemic has subsided. In this way we can sustain favourable financial conditions and support growth and employment as well as the return of inflation to around 2% over the medium term.

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During the course of 2020 we renewed the Bank of Finland’s strategy. The animating spirit of our work is both timeless and in tune with the needs of today: we shall continue to build a sustainable economy and stability. Our goal is to maintain price and financial stability under all circumstances in order to ensure the wellbeing of the public.

The strategy also seeks to respond to the major changes in society currently underway, such as population ageing, thoroughgoing digitalisation and the strong accumulation of debt.

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Renewal of the ECB’s strategy, which we have helped accelerate, progressed in the course of the autumn. Analytical work conducted in the Bank of Finland concentrated especially on renewing the definition of the inflation target and the communication of monetary policy. The strategy is being renewed so that it will serve as well as possible the needs of Europeans now and in the future.

The Bank of Finland also fosters public awareness of the economy. The key here lies in the distribution of comprehensible information and dialogue. An important meeting place around economic themes is the Bank of Finland Museum.

The bread and butter of a central bank is monetary policy. In addition, we are also constantly examining other major issues in society. The Bank of Finland seeks to nurture sustainable growth and the stability of the economy, in the final analysis to the benefit of society as a whole. Environmental sustainability weighs ever more heavily in our investment activities and the supervision of financial stability.

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At the present juncture economic policy needs to pursue two goals side by side: getting a grip on the pandemic and stimulating an upturn in the economy. Due to the pandemic, economic policy has required, and still requires rapid and forceful measures to help households and businesses survive the worst. At the same time we must look ahead: to the renewal of the economy, improvements in employment and productivity and more sustainable public finances.

Meanwhile, we should not forget – as we wait to be vaccinated – that it is still important to wear a face mask, observe a safe distance, wash our hands and in general follow the recommendations to control the spread of the virus. So we Finns are still required to display our tournament stamina. This remains – especially now – the best medicine for our health, but also for the economy and employment.

Olli Rehn
Governor
Bank of Finland

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