Strengthened crisis preparedness in the Nordic-Baltic region
News, Economic Commentaries Today, the Nordic and Baltic countries are facing new risks. The geopolitical situation around the world requires authorities to work together not only within countries but also across national borders. Through sustained efforts, the Nordic-Baltic countries have developed a good joint capacity to manage financial crises. To maintain and further develop this capacity, they are continuing to work together.
In a new Economic Commentary, authors David Farelius and Johannes Forss Sandahl of the Financial Stability Department describe how Nordic-Baltic financial crisis preparedness has evolved. The Nordic and Baltic countries have significant financial cross-border interconnections. This means that financial disruptions could spread across the region and it makes the countries interdependent.
However, over the past 15 years, the countries' collective capacity to manage crises has improved. One reason is that the Baltic countries are currently participating in the euro area. In addition, cooperation between the countries' public authorities has been strengthened to better identify risks and manage disruptions. Major crisis exercises have been held, increasing capacity and strengthening crisis preparedness. The central banks in the Nordic and Baltic countries have also strengthened their cooperation to ensure the availability of foreign exchange in the event of liquidity problems in banks with operations in several countries.
Authors: David Farelius and Johannes Forss Sandahl, who work in the Financial Stability Department