Finnish Financial System Faces Risks as Interest Rates Rise, Says Deputy Governor of Bank of Finland

The Bank of Finland’s Deputy Governor, Marja Nykänen, has warned that rising interest rates are putting pressure on households and could weaken the Finnish economy if spending is cut back significantly. The increase in interest rates has also led to a decline in property prices and reduced house sales in Finland. Nykänen emphasized the importance of persistent work towards financial system stability, including the implementation of a mandatory cap on debt service-to-income and a common European deposit insurance scheme. However, she noted that Finnish banks’ capital position has remained strong and they are well-equipped to meet growing risks in the Nordic housing and real estate markets.