Finland to rapidly implement measures in EU crisis package

Finnish banking sector seen to be in relatively good shape

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Finland is to implement the joint measures agreed upon during the weekend by the countries of the euro zone and Britain to stabilise the financial market, said Minister of Finance Jyrki Katainen (Nat. Coalition Party) in Helsinki on Monday.
     Katainen added that it is not possible to evaluate the full need for subsidies, because banks in Finland are not suffering from the same kinds of problems as those in other countries are.
     
“The guarantees do not involve expenditure, and as for capitalisation, I cannot say, as it is not known if it is needed by anyone.”
     He said, however, that a ceiling will be placed on the amount of money taxpayers’ money that is to be spent.
      He would also not set a timetable for the measures, but promised that the decisions would be implemented as quickly as possible. The support package is to be in effect through the end of next year.
     
According to the decision reached at the euro zone summit in Paris on Sunday, the crisis package includes state guarantees for new credit instruments used by banks, possible state capital investments into viable banks, and the use of state capital investments to rescue banks in trouble.
     Katainen said that the joint action taken by the euro zone constitutes a massive package of measures for the restoration of stability on a market which, in his words, had fallen into a “state of psychotic mistrust”.
     Extending the medical metaphor, Katainen said that the patient - the world financial market - has been so ill mentally, that it has not trusted anyone, not even itself. The states are operating as doctors and are pumping strong medicine into the patient so that it can recover. The medicine is provided by the EU.
     “The aim is for the patient to be fit to work and completely healthy. Finland is strongly committed to the medication and will use it if necessary”, Katainen said.
     
Both Katainen and Minister of Public Administration and Local Government Mari Kiviniemi (Centre), who is responsible for the finance market, said that they are pleased with the results of the agreement reached on Sunday in Paris.
     Kiviniemi said that it is important for Finland for all of the countries to be in the same position.
     
Katainen says that the financial crisis has been a tough lesson for the financial sector and for European and American legislators.
     “When we get through this it is clear that we will increase openness and regulations, starting with incentive systems”, Katainen said.
     
Stock market prices in Helsinki shot up on Monday in reaction to the support package promised at the Paris summit. The extensive guarantees of interbank loans broke the cycle of pessimism on other bourses around the world at least for the time being.
     In Helsinki the OMXH index rose 6.8 per cent, on Monday, closing at 6,194 points. The rising trend continued on Tuesday; at noon, share prices wer ejust under six per cent higher than Monday’s closing.

More on this subject:
 Bank of Finland Governor: Situation not over, but many positive things have happened

Previously in HS International Edition:
  Vanhanen: Finnish banks in good shape (13.10.2008)

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