olli rehn : the european economy under pressure - how is geopolitics impacting trade, finance and competitiveness? remarks by mr olli rehn, governor of the bank of finland, at the annual meeting of the eu heads of mission, bank of finland, helsinki, 2 december 2024. * * * accompanying presentation of the speech your excellencies, distinguished guests, ladies and gentlemen, let me warmly welcome you to this traditional lunch event at the bank of finland. it is an honour and pleasure to meet with you today, at the start of the week that culminates to the finnish independence day. as eu heads of mission, your role is pivotal in helping shape our collective future, and i am grateful for the opportunity to engage with you. today, i would like to share my views on how the current geopolitical climate is influencing our economy. i will focus on three key channels. first, the impact of geopolitics on trade. second, on finance, and hence monetary policy. and finally, on competitiveness and productivity. the underlying message you may detect throughout my speech is that we need unity and agility in europe to stay relevant in the world – a world characterised by heightened geopolitical tensions. slide 2. global geopolitical tensions remain elevated currently, we find ourselves amid a tense and dangerous geopolitical landscape, marked by multiple simultaneous conflicts and crises – a polycrisis – which have ramifications on europe and beyond. global geopolitical tensions remain elevated, as shown by the geopolitical risk index – and as we all know from our daily news flow. slide 3. geopolitics is overshadowing economic developments looking at the global landscape, the rise in geopolitical tensions is especially due to russia's illegal and brutal war in ukraine, the conflicts in the middle east, and china's strategic ambitions as a technological and military big power. these developments have profound implications for europe, including for our economic outlook and policy. as we move forward, the key to successfully navigating these global challenges lies in the effective cooperation between the united states and the european union, together with our international partners in the global geopolitical arena. as autocracies like russia and china are forcibly challenging the rules - based international order, we need 1 / 6 bis - central bankers'speeches to defend the value system of liberal democracy against these systemic rivals that advocate alternative governance models. it is therefore

products brought to market through digital channels from beginning to end. the information obtained is key for monitoring and overseeing the practices of the credit institutions in offering consumer credit through digital channels, namely apps and online platforms. this process has been developed in strict cooperation with the credit institutions, and is a good example of the dialogue between supervisors and supervised entities that i have mentioned. 5. as has been publicised and featured in the news, consumer credit is growing rapidly in portugal, now at levels akin to those of before the financial crisis. it is vital to avoid successive cycles of excessive and injudicious lending followed by a sharp and lengthy slump. as is known, banco de portugal adopted a macroprudential measure aimed at preventing the accumulation of excessive risk on the banks ’ balance sheets and ensuring that households obtain sustainable financing, minimising the risk of arrears. its purpose is to help bring appropriate rigour to credit standards. consumer credit agreements signed after 1 july 2018 fall under that measure, which will therefore have an impact on the consumer credit market. the terms in which consumer credit is sometimes debated seem to me to be a genuine paradox for our time. in truth, the development and expansion of consumer credit come as a direct consequence of powerful trends, particularly the stagnation or reduction of salaries, the decline in saving and the hyperdevelopment of the financial sector. consumer credit is inseparably linked to a social model that places consumption as a core value. it is a central element of what we might call the ‘ credit society ', and, despite what we might wish to think, is a phenomenon present, albeit to varying degrees, in all the countries with developed financial systems. when things go wrong and the dream becomes a nightmare, moral judgements appear in public debate. while apparently uncontroversial in nature, in truth they are superficial judgements by and large, as they do not pay due regard to the underlying causes fuelling indebtedness, and ultimately abstract from the real roots of the issue, intentionally or otherwise. 3 / 4 bis central bankers'speeches in truth, as is clear, there is nothing intrinsically wrong with consumers taking on credit ; on the contrary, for a long time consumer credit has been an economic and social necessity. what should not and must not happen is irresponsible lending, disrespecting consumers ’ rights, with the intention of taking opportunistic economic advantage of bank customers ’ weaknesses and