In the 1980s the Bank of Finland, following international trends, gradually lifted the controls on capital movements and also liberalized domestic credit markets. After the deregulation, a very strong credit cycle developed which also produced a sizable current account deficit. This credit cycle ended in 1991 with a severe banking crisis.
At the same time, Finland lost some of her traditional export markets when the Soviet Union collapsed. In the course of the ensuing economic crisis, Finland’s GDP fell by some 14 per cent. The Finnish markka was first devalued (November 1991) and the floated (September 1992), depreciating all in all by about 30 per cent against the European currency unit (ECU).