- Sara Mella, chair of Finance Finland’s Board, says competitiveness and growth objectives should be included in the legal mandates of European and national financial supervisory authorities. Supervisory operations should take economic growth and competitiveness factors into account at both national and EU levels.
- The consideration of competitiveness does not entail loosening regulation but ensuring that the regulation supports growth and investment as consistently as it safeguards stability and consumer protection.
- The Finnish Financial Supervisory Authority (FIN-FSA) could enhance Finland’s competitiveness by utilising macroprudential tools and avoiding excessive and burdensome obligations.
Chair of Finance Finland’s Board of Directors Sara Mella, Head of Personal Banking at Nordea, encourages discussion on incorporating competitiveness and growth goals into the mandates of the Finnish Financial Supervisory Authority (FIN-FSA) and the European Supervisory Authorities (ESAs).
EU financial market regulation has expanded significantly in recent years at the expense of economic growth. Mella finds it concerning that the mandates of national supervisors, such as the FIN-FSA, currently do not take into account growth and competitiveness objectives. She points out that the issue is not confined to Finland: the need to change supervisors’ mandates is being discussed across Europe, and the United Kingdom has already adopted such a mandate. The FIN-FSA’s mandate is in need of a similar review.
“The European Banking Federation (EBF) and the European Fund and Asset Management Association (EFAMA) have proposed that the European Commission and the ESAs should also be required to take into account how their regulatory approaches impact investment, innovation and market attractiveness. The regulatory and supervisory environment should support competitiveness as strongly and consistently as it safeguards stability and consumers. The same proposal should be extended to the Finnish financial supervisor as well”, Mella argues.
Growth is not created merely by preventing mistakes but by enabling success
Mella remarks how promoting Finnish and European competitiveness has gained priority on the political agenda as of late.
“The banking sector has the potential to accelerate domestic economic growth, and it should be given more opportunities to use this potential. The FIN-FSA can promote Finnish competitiveness with the interpretations it issues and by avoiding excessive and burdensome obligations. Banks’ ability to finance economic growth is also influenced by how macroprudential tools are used, which is under the FIN-FSA’s control in Finland”, Mella says.
Mella points out that in addition to their supervisory role, national and EU-level supervisors also play an important role as regulators that draft and issue lower-level regulation. According to Mella, giving them mandates that incorporate growth as a complementary goal would promote stronger dialogue and thus more balanced decision-making.
“Taking diverse viewpoints into account has been shown to improve the quality of decision-making. Nowadays, authorities set the limits, and the rest of society adapts. Focusing solely on risks leads to a very narrow outlook: risks are identified, but the way that regulation and supervision impact access to finance, market competitiveness and economic growth is not acknowledged”, Mella analyses.
Mella highlights, however, that consideration of competitiveness does not entail lightening regulation or slackening supervision. “We simply need to ensure that regulation promotes growth and investment as consistently as it safeguards stability and consumer protection”, Mella concludes.
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