Financial liberalisation much more encompassing ‘than just technical lifting of controls'
Market participants challenged as they adapt to new liberalised environment
The behaviour of financial institutions during a process of financial liberalisation involves major challenges as the market participants learn to understand their new operational environment, Bank of Finland board member Seppo Honkapohja said today at the opening of a conference on financial liberalisation in China in Helsinki.
"Financial liberalisation is a much more encompassing development than just technical lifting of controls," Honkapohja said. "Market-based financial systems contain new risks and uncertainties when compared to tightly controlled systems."
He added that a competitive financial system impact the effectiveness of banks and other institutions and that they must be ready to carry out efficiency-enhancing reforms to cope with the new business environment.
"Strengthening of the capital base and reforms of supervisory systems are important ingredients to the process of financial liberalisation," Honkapohja said.
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