Erkki Liikanen, the Governor of the Bank of Finland, has issued yet another warning about the growing debt burden of households in Finland.
“If everyone is racking up debt, everyone will also have to tighten the belt. People are currently taking out housing loans on both their own behalf and on their housing companies’ behalf,” Liikanen stated in an interview on YLE TV1 on Saturday.
“You should keep in mind that interest rates will eventually go up. Your ability to repay must hold up also at times of high interest rates,” he underlined.
The Bank of Finland warned in its regular bulletin earlier last week that households with large amounts of debt relative to their assets and income are particularly vulnerable to income disruptions, increases in interest rates and drops in real estate prices.
Liikanen also commented on the demands of the new ruling coalition formed by Lega Nord and the Five Star Movement in Italy. The European Central Bank (ECB) should according to the populist coalition partners forgive 250 billion euros of debt ran up by Italy.
“The ECB can’t fund states. It’d simply be illegal and that’s exactly what the debt cancellation would be,” retorted Liikanen.
He also indicated that he is not particularly concerned about the political situation in the country. Italy, he pointed out, has always managed to see to its obligations in spite of its considerable debt burden.
Aleksi Teivainen – HT
Photo: Vesa Moilanen – Lehtikuva
Source: Uusi Suomi