A cross-regional crisis simulation took place between the Baltic and the Nordic countries in the middle of September to prepare for times of confrontation.
The simulation brought together three regional banks and almost 450 official representatives from Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden as well from relevant EU-authorities: the European Commission, European Central Bank (ECB), Single Resolutions Board (SRB) and European Banking Authority (EBA). A staff member of the International Monetary Fund was also invited to participate as an observer.
The purpose of the simulation was to test communication, information sharing and collaboration between the authorities during crisis and pressured situations. The simulation was working as a crisis scenario where all the fictive banks went through three stages in crisis handling processes:
- Transition from normal business to recovery including addressing liquidity issues.
- Movement from recovery to resolution, with responsible authorities assuming control of the bank.
- After the resolution, the return of the restructured bank to the market.
During the simulation, authorities applied tools and powers at their disposal according to the regulatory framework of the European union for banking supervision and crisis management. The result from this exercise will be documented and shared to develop existing crisis management routines. This will strengthen their crisis preparedness and further enhance the crisis framework in the Nordic-Baltic region.
Preparation team established under the Nordic Baltic Stability Group (NBSG) and led by the Danish resolution entity Finansiel Stabilitet was formed in 2023 to prepare the exercise. The team was advised by Oliver Wyman, an American management and consulting firm, in the preparation of the exercise. The NBSG consists of ministries, central banks, supervisory authorities and resolution authorities in the eight Nordic and Baltic countries. In the context of the NBSG, the Nordic and Baltic authorities have agreed to conduct regular financial crisis simulation exercises.
The report is available on the Financial Stability Company website.
