The Bank of Finland in Kruununhaka, Helsinki. Finland’s financial system has remained stable, but the threats have increased. Photo: Antti Aimo-Koivisto / Lehtikuva
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The Bank of Finland says risks to the country’s financial system have grown in 2025, citing global instability, high household debt, and rising digital threats.
Marja Nykänen, Deputy Governor of the Bank of Finland, said the domestic banking sector remains stable but faces growing external pressures. These include geopolitical tensions, such as the war in Ukraine, and economic disruptions like new import tariffs imposed by the United States.
“Finland’s financial system has remained stable, but the threats it faces are increasing and now come mainly from outside our borders,” Nykänen said.
The central bank said Finland’s economy could suffer if declining confidence undermines consumption, investment, or exports. In response, the Bank of Finland is urging commercial banks to maintain strong capital buffers. These buffers are intended to support lending during unexpected crises and should be managed flexibly to respond to changing risk conditions.
“Strong shock resistance in the banking sector is vital for financial stability in Finland, as households and businesses depend heavily on banks for financing,” Nykänen said.
The bank highlighted two major vulnerabilities: the high level of household indebtedness and the widespread use of variable interest rate loans. Although some of these risks have materialised in recent years, they have not yet threatened the overall stability of the financial system.
The Bank of Finland also criticised the government’s recent proposal to ease mortgage and housing loan regulations. Nykänen said the move could further increase systemic financial risk.
Cybersecurity remains a growing concern. Banks in Finland have been frequent targets of distributed denial-of-service attacks in recent years. The Bank of Finland says financial crime continues to rise and is increasingly affecting both individuals and businesses.
“Banks have reduced their branch networks and pushed customers online, regardless of digital skills. Banks gain the financial benefit, but customers carry the risk. If banks fail to act, regulation may need to be adjusted to address liability in banking fraud,” Nykänen said.
According to the bank, weakening security in neighbouring regions has left the Finnish banking system more vulnerable to state-sponsored cyberattacks. As financial systems become more digitised, the opportunities for criminal exploitation also increase. The rapid development of artificial intelligence could accelerate these risks.
HT
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Source: www.helsinkitimes.fi
