 | |
 | |
| Headquarters | Helsinki |
|---|---|
| Established | 1 March 1812 |
| Ownership | 100%state ownership[1] |
| Governor | Olli Rehn |
| Central bank of | Finland |
| Reserves | 6 230 million USD[1] |
| Succeeded by | European Central Bank (1999)1 |
| Website | suomenpankki.fi/en |
| 1 The Bank of Finland still exists but many functions have been taken over by the ECB. | |
TheBank of Finland (Finnish:Suomen Pankki,Swedish:Finlands Bank) is thenational central bank forFinland within theEurosystem. It was the Finnishcentral bank from 1865 to 1998, issuing themarkka. It views itself as the fourth oldest surviving central bank in the world, after Sweden'sRiksbank, theBank of England, and theBank of France,[2] having been originally created in 1811-1812 as theOffice of Exchange, Lending, and Deposits of the Grand Duchy of Finland (Finnish:Waihetus-, Laina- ja Depositioni-Contori Suomen Suuren-ruhtinaanmaassa) before taking its current name in 1840. Unlike many other longstanding central banks, it has always been government-owned.
The Bank of Finland is not itself afinancial supervisory authority, but participates inEuropean banking supervision as a member of theSupervisory Board of the European Central Bank.[3] It is also a member of theEuropean Systemic Risk Board (ESRB).[4]
In 1809, theRussian Empire annexed Finland and made it aGrand Duchy with its own administrative structure. One aim of the new authorities was to sever Finland's previous economic integration withSweden, including the use of theSwedish riksdaler as currency. To that effect, the Office of Exchange, Lending, and Deposits was chartered on 12 December 1811 and established on 1 March 1812 inTurku byAlexander I of Russia, partly modeled on theBank of Sweden.[5][6] It started operations in August 1812. It was owned and controlled by the Grand Duchy's government, but from the start had its own capital and balance sheet. The Grand Duchy government was usually in surplus and did not use the Office to finance itself, allowing it to extend credit to the Finnish economy instead.[7]: 2 It issuedbanknotes denominated inrubles andkopecks and provided credit to local landowners and merchants.[8] Its design was inspired by Russian Secretary of StateMikhail Speransky, whose plans to create a similar institution for Russia itself were thwarted by theFrench invasion of Russia in mid-1812.[7]: 3
In 1819 the institution relocated toHelsinki. Its efforts to displace the Swedish currency were only partly successful, however, until both Sweden (in 1834) and Russia (in 1839) returned to thesilver standard. In 1840, the remaining riksdaler banknotes in Finland were withdrawn from circulation and substituted by rubles, and the withdrawn riksdaler notes were exchanged for silver at the Riksbank in Stockholm. This allowed the Bank of Finland (which took that name in 1840[8]) to accumulate a significant metallic reserve, start discounting bills of exchange, and generally become much larger and more liquid in the 1840s, in contrast to the RussianState Commercial Bank and other Russian public banks of the time.[7]: 3 The Bank soon opened its first branches in Turku andVaasa.[8] From then on, Russian currency-denominated notes became the dominant means of payment in the Grand Duchy, and the Bank of Finland's banknotes represented less than one percent of all banknotes circulating in the Russian Empire, thus Finland had effectively no monetary autonomy. Consequently, Finland suffered from the Russian monetary disorder associated with theCrimean War and its financially disastrous aftermath. The convertibility of its banknotes to silver was again restricted from April 1854.[7]: 4
Requests for greater protection from Russian monetary vagaries developed in parallel with the Russian efforts at monetary stabilization, including the establishment of theState Bank of the Russian Empire in 1860 and subsequent reforms initiated by finance ministerMichael von Reutern. On 4 April 1860,Alexander II authorized the Bank of Finland to issue its own denomination, theFinnish markka, defined as a quarter of the Russian paper ruble (and thus nearly equal in value with theFrench franc at the time).[7]: 5 In 1865, the Bank of Finland finally secured monetary policy autonomy when Finnish SenatorJohan Vilhelm Snellman obtained from Alexander the right to keep the markka linked to the silver standard irrespective of the ruble's situation, which was implemented in March 1866. From then on, the Bank of Finland effectively set its ownmonetary policy, making the Grand Duchy a separate currency zone from the rest of the Russian Empire, with the markka fluctuating in the range of 2.79 to 3.60 to the ruble between 1866 and 1875.[7]: 6
In 1868, the ownership and oversight of the Bank was transferred from Finland's executiveSenate to its recently revived legislativeDiet (from 1906, theParliament of Finland), thus strengthening its independence and accountability along the lines adopted by Sweden. To reflect the Bank's new institutional position, plans were made to move it away from its location in the southern wing of theSenate Building in central Helsinki. The bank purchased a nearby plot of land in 1875 and held a design competition in 1876, which was won by Balto-German architectLudwig Bohnstedt. The new building's construction started in 1878 and was completed in 1883.[9]
In 1876, Alexander II assented to Finland's shift from silver to thegold standard.[7]: 7 This was implemented in July 1878, when the Bank of Finland unilaterally joined theLatin Monetary Union, a stance it kept until the outbreak ofWorld War I.[8] Meanwhile, theRusso-Turkish War had again plunged Russia into monetary turmoil, and the ruble remained only partly convertible into markka (coins in small quantities). Even after Russia joined the gold standard in 1897, an imperial decree issued in 1904 restored the legal tender status of Russian ruble gold coins in Finland, but was never implemented because of theRusso-Japanese War.[7]: 8-9
Shortly after theindependence of Finland in late 1917, thecivil war erupted. TheRed Guards occupied the Bank of Finland's head office together with other strategic points of Helsinki in late January 1918 and secured control of the printing presses. The bank's professional staff refused to obey them, however, and the gold reserves had been precautionarily removed to the branch inKuopio in Northern Finland;[10] The Reds tried to seize the reserves in Kuopio by force in early February, but withdrew after a weeklong battle.[11]
Red leaderAnton Huotari became the chair of the Executive Board in Helsinki,[12] in competition to governorClas von Collan [fi], who remained inStockholm during the civil war, and the other Executive Board members who stayed with the White government inVaasa. The White side remained in control of the gold reserves, half of the branch network in Finland, and foreign assets, but suffered from a cash shortage as it had no capacity to print banknotes.[13] The German troops fighting theBattle of Helsinki eventually retook control of the head office on 13 April 1918, and the Bank of Finland reopened for business on 22 April 1918.[14]
After these dramatic events, the Bank of Finland kept facing high inflation, but eventually managed to stabilize the markka in 1923 at about ten percent of its prewar gold value. It returned to thegold standard in 1926, but floated again in the wake theEuropean banking crisis of 1931. In the spring of 1933, it pegged the markka to thepound sterling. During theinterwar period, the Bank acquired great prestige in the new country, linked to the leadership of its longstanding governorRisto Ryti who becamePrime Minister of Finland in December 1939 andPresident a year later in the midst of theInterim Peace.[8]
The Bank's head office building was damaged by Soviet bombing during theContinuation War air raids of 1944.[9] AfterWorld War II and a renewed inflationary episode until the early 1950s, the Bank of Finland managed the country's regime offinancial repression, then liberalization in the 1980s. The markka was devalued on multiple occasions until finally floating in September 1992.[8]
New practices and technologies led the Bank of Finland to phase out its local branch network, starting with closing theHämeenlinna branch in 1963. In the years 1991–1994, eight other branches were closed, leaving only Turku,Tampere,Kuopio,Oulu andVantaa in operation. The Turku branch was closed in 2007, those in Tampere and Kuopio in 2012, and the Oulu branch in 2019.
Following the1990s Finnish banking crisis, financial supervision was reorganized in Finland with the creation of theRahoitustarkastus (Rata) in 1993, an independent banking supervisor which is part of the Bank of Finland albeit with its own separate governance. In 2009, theFinnish Financial Supervisory Authority was formed by merging Rata with the previously separate insurance supervisor.
At the start ofEconomic and Monetary Union, Bank of Finland GovernorSirkka Hämäläinen joined the inauguralExecutive Board of the European Central Bank on 1 June 1998, becoming its first female member.[8]
![Helsinki head office extension designed by Harry W. Schreck [fi] in the late 1950s[9]](/mt/?noimg=&dark=on&url=https%3a%2f%2fen.wikipedia.org%2fwiki%2fFile%3aBank_of_Finland%2c_Helsinki_-_DSC05358.JPG)
![Former branch [fi] in Tampere](/mt/?noimg=&dark=on&url=https%3a%2f%2fen.wikipedia.org%2fwiki%2fFile%3aSuomen_Pankin_talo_Tampere.jpg)
The Bank of Finland is Finland's central bank and a member of theEuropean System of Central Banks and of theEurosystem.[15] It is Finland's monetary authority, and is responsible for the country's currency supply and foreign exchange reserves.
The Bank of Finland is owned by theRepublic of Finland, and governed by theFinnish Parliament through the Parliamentary Supervisory Council and the Board of the bank. The Board is responsible for the administration of the bank, and the Parliamentary Supervisory Council for supervising the administration and activities of the bank and for other statutory tasks. The bank is governed under the provisions of the Act on the Bank of Finland, passed in 1998.
The bank had a staff of about 380 persons in 2017.[16]
The highest official in the bank is the Governor who also chairs the board. Members of the Board in August 2018[update] wereOlli Rehn (Governor),Marja Nykänen [fi] (Deputy Governor) andTuomas Välimäki [fi].[16]
The Bank of Finland Institute for Emerging Economies [fi] (BOFIT) is the Bank of Finland's research institute specializing in emerging economies, focusing mainly on monitoring and analyzing the economic development in Russia and China and conducting related academic research. It was created in 1991, and derives its name from the Bank of Finland (BOF) and the Finnish nameidäntutkimus (IT) meaning Eastern Studies.[17][18]
60°10′16″N24°57′09″E / 60.17121°N 24.95246°E /60.17121; 24.95246
