The economic and security outlook for Finland and Europe underwent a rapid transformation during 2022, and it was expected that these changes would be reflected extensively in the Bank of Finland’s activities. The Bank therefore updated its strategic priorities.

Russia’s war in Ukraine, intensified geopolitical tensions, recovery from the COVID-19 pandemic, and surging inflation all left their mark on 2022.

In response to the changing environment, the Bank of Finland Board, in June, updated the strategic priorities that are used to guide the Bank’s activities over the medium term.  The Bank of Finland’s mission statement, vision and operating principles were found to be still very relevant and were retained without amendment.

Bank of Finland’s updated strategic priorities for 2023–2025:

  • European Central Bank monetary policy in the new inflation environment
  • Preparedness and security of supply
  • Future of European payment
  • EU-wide review of macroprudential policy
  • Contributing to domestic economic policy
  • Promoting sustainable economic growth and climate goals in the EU.

ECB monetary policy in the new inflation environment

The post-pandemic economic recovery and Russia’s war in Ukraine together contributed to a surge in inflation. The ECB then tightened its monetary policy in stages during 2022.

As a member of the Eurosystem, the Bank of Finland has a strong focus on monetary policy research and analysis and on the development of policy tools. This is particularly important in an environment in which there is great uncertainty about the course the economy will take and about the dynamics of inflation.

The Bank of Finland also does its best to make sure that the ECB’s monetary policy decisions are explained to the general public in a way that can be readily understood.

Preparedness and security of supply

The security environment in Europe changed considerably in 2022. As the country’s monetary authority, the Bank of Finland has a responsibility regarding the national security of supply.

The Bank is further developing the resilience of Finland’s payment and financial systems in cooperation with other public authorities and the financial sector.

In this altered environment, the importance of the Bank’s own preparedness is also emphasised. The aspects given special attention by the Bank during the year include its preparedness for cyber and hybrid threats.

Future of European payment

The pandemic brought added impetus to the spread of digital payments. The Bank of Finland work to promote the development of safe and effective payment systems includes its support for the introduction of a European payments strategy in the Finnish market.

Currently under way in the Eurosystem are a number of significant development projects concerning financial markets infrastructure.

The Bank of Finland is continuing its active input to the Eurosystem’s joint project examining the possibility of a digital euro. Such a digital euro could complement the range of payment instruments in the future.

EU-wide review of macroprudential policy

Slower growth in the economy and the rise in interest rates are heightening concerns over the debt sustainability of households, businesses and governments.

An upsurge in debt problems could weaken the resilience of credit institutions. Pressure is also mounting to expand macroprudential policy beyond the banking sector as financial intermediation becomes more diverse.

The aim of revising the framework, tools and analytical methods of macroprudential policy is to ensure that the authorities are able to safeguard financial stability through timely, targeted and appropriately scaled policy measures.

Contributing to domestic economic policy

The Bank of Finland’s tasks include furthering sustainable growth in the Finnish economy and in the wider EU economy without compromising price stability.

The Bank participates in the national debate on economic policy in the role of impartial expert. Its views are based on research, high-quality analysis and reliable data.

In its analytical work, the Bank focuses especially on the Finnish economy’s structural challenges. Important factors for sustainable economic growth include debt sustainability, employment, productivity and innovation.

Promoting sustainable economic growth and climate goals in the EU

Growth in Finland’s economy is closely linked to the EU’s economic performance and the Eurosystem economy.

The operation of the single market, the trend in productivity and level of sustainable growth are all affected by the structures and regulations of the EU’s economic governance framework. These also have an impact on the implementation of monetary and macroprudential policy.

Climate change is a global challenge and also represents a key challenge for central banks, and one that requires solutions determined within international forums.

The Bank of Finland is contributing to the development work on the EU’s economic governance framework as well as to the efforts to combat climate change and the analysis and management of the associated risks.