New financial sector regulation (I am referring to the CRR/CRD and the forthcoming BRRD) and single banking supervision will add new aspects and new partners to Nordic-Baltic cooperation. The goal of harmonisation of cross-border regulatory and supervisory practices is to create an operating environment for banks and other financial institutions that fosters mutual trust and helps ensure that the provision of financial services is continuous and satisfies the needs of the real economy. When the SSM becomes operational, it will have important effects on the routine supervisory work in the Nordic-Baltic region. The home countries of several subsidiaries that will be included under direct supervision by the SSM/ECB will probably remain outside the SSM. This presents a new challenge for the Nordic-Baltic cooperation framework. In the light of the success of our regional cooperation it is rational that we build the new principles of supervision on the existing foundation wherever possible. I hope and believe that in this new and more complex framework we will be able to preserve an important value – the spirit of cooperation. In view of the development of the single market it is also important that the building of the banking union be completed – the SSM must be followed by the SRM. Ideally, this would create the balance between rights and responsibilities which has been the guiding principle in safeguarding cross-border financial stability for nearly a decade.
There are differences in economic, lending and asset price cycles, and there are also differences in economic history, crisis experience and institutional arrangements. The developments in recent years have exacerbated these dissimilarities and perhaps even created new ones. It appears to me that the success in combining the positive aspects of diversity and integration in the Nordic-Baltic region may serve as a model for the European Union. If cooperation and coordination has been possible in this region, there is reason to hope for the same in the European Union as a whole. Cooperation between the institutions responsible for financial stability in the region has a history of over 10 years. This cooperation has become considerably closer since the outbreak of the global financial crisis and the reversal of capital flows in our countries. Routine work is done in supervisory colleges, and there are high-level multilateral groups for coordinating macro-prudential supervision and crisis management. It has been very important that trust and open communication as well as mutual support and a willingness to take responsibility have remained in place when the financial stability of a Nordic-Baltic country is really at stake. A shared understanding of the need to deal with macroeconomic and financial stability risks at a national level has provided a solid foundation for Nordic-Baltic cooperation. 2014 will bring new challenges for Europe The year 2014 will bring new challenges.