---
title: "The Bank of Finland Challenged the Government | Jussi Ahokas | Neuvottelija 197"
titleOriginal: "Suomen Pankki haastoi hallituksen | Jussi Ahokas | Neuvottelija 197"
episodeNumber: "197"
guest: "Jussi Ahokas"
datePublished: 2023-06-19
duration: "31:47"
youtube: "https://www.youtube.com/watch?v=IF6Qa_vnnus"
originalLanguage: "fi"
topics: ["finnish_economy_policy","investing_markets"]
subtitleMethod: "none"
provenance: "Owner page assembled from YouTube metadata, the neuvottelija.fi episode record and a MacWhisper transcription of the Finnish audio. The chapter marks are the publisher's own list as released with the video, each verified to fall within ten seconds of a real transcript cue and translated into English here. No English caption track was produced, so no transcript is published here. The transcription contains no gaps and carries no speaker labels, but with a single guest the speakers are reliably distinguishable. The cleaned Finnish cue file corrects proper names and technical terms the automatic transcription mangled, including the ECB's Securities Markets Programme, which had been transcribed as \"S&P\"; a figure given for the book's age was garbled and is not repeated here."
fiCanonical: "https://www.neuvottelija.fi/fi/episodes/289-suomen-pankki-haastoi-hallituksen-jussi-ahokas-neuvottelija"
canonical: https://www.neuvottelija.com/podcast/episodes/ep197-suomen-pankki-haastoi-hallituksen-jussi-ahokas/
---
# The Bank of Finland Challenged the Government | Jussi Ahokas | Neuvottelija 197

English subtitles are not available on this page. This is an episode summary, not a curated transcript.

## Chapters

- [00:00](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=0s) Jussi Ahokas and his translation of Joan Robinson's Introduction to the Theory of Employment (Vastapaino 2023). Keynes's theory in simplified form
- [01:20](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=80s) The previous episode on the dispute between Nalle Wahlroos and Olli Rehn over the nature of inflation, and the current one between Petteri Orpo and the Bank of Finland
- [02:20](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=140s) The first government crisis? Olli Rehn's letter of 17 June on the problems in section 9.1 of the programme
- [03:00](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=180s) “The government monitors and seeks to manage the financing risk arising for the state through the ECB and the Bank of Finland.” Central bank losses and equity against the state's financing risk
- [04:54](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=294s) The Bank of Finland's strong balance sheet and billions in reserves against other euro central banks' weak ones
- [05:30](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=330s) “Finland will push for the no-bailout rule at ECB level too.” The South Park headless chicken sketch. Whose bailout — the central bank's, the state's, or both?
- [07:07](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=427s) The misconception finally corrected officially. Yes, a central bank can operate with negative capital in the euro area too. It always could. The Bank of Finland and the BIS confirm it
- [08:53](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=533s) A light tinfoil hat — is the eurosystem preparing for recapitalisation, and does it therefore want to contain public debate?
- [10:42](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=642s) The Bank of Finland has been a good dividend payer in the euro era — over three billion. That is now in question
- [12:04](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=724s) A government programme is not a statute book, so criticising it this strongly is odd. “Finland will push for measures limiting systemic risk in the eurosystem” is a sensible entry
- [14:20](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=860s) The purpose of the 9.1 entries is probably a return to austerity and to Maastricht
- [16:40](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1000s) What the constitution says about the Bank of Finland. The eurosystem is not in its final form
- [19:40](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1180s) Changes in fiscal policy in the EU and under the right-wing government
- [20:20](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1220s) Could the bailout of Greece and its central bank repeat in the euro area, for example in Italy?
- [22:05](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1325s) A return to low rates, inflation easing and property risks unwinding? The US against Europe
- [26:12](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1572s) Is the Finnish right-wing government's fiscal policy tightening? Or is it neutral after all?
- [29:38](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1778s) Expectations of the consequences — will this become the first government crisis, or will the programme be amended?
- [30:15](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1815s) Sanna Marin's tweet on the objectives of monetary policy
- [30:50](https://www.youtube.com/watch?v=IF6Qa_vnnus&t=1850s) Could the row spread internationally? An invitation to Olli Rehn, Petteri Orpo and Riikka Purra

## Summary

**Jussi Ahokas** — economist at the BIOS research unit, doctoral researcher and the Finnish
translator of Joan Robinson's *Introduction to the Theory of Employment* — goes through the
Bank of Finland's letter to prime-minister-designate Petteri Orpo sentence by sentence. The
letter went out on 17 June 2023, the day after the government programme was agreed, and said
the entries in section 9.1 were problematic for central bank independence.

**The episode's single piece of news** is that the Bank of Finland now confirms, in its own
blog, what Willem Buiter told Miettinen in London a decade earlier: a central bank can
operate with negative equity. Once the reserve fund is exhausted, a loss may be left
uncovered for the time being and recovered from later years' profits. The BIS published a
paper to the same effect at the start of the year.

**Ahokas grades the three entries differently**, which is what makes the episode more than a
partisan reading. The financing risk entry he reads both ways: a government worried about
fiscal consequences landing on its own desk through the central banking system may
legitimately say so out loud, but a central bank can equally read it as pressure to change
its own choices — and that, he thinks, is exactly how it was read. The no-bailout entry he
finds pointless, because losses in the purchase programmes were kept national from the
outset, so the basic Maastricht rule already covers the ground; it would have been better
not written. The systemic risk entry — Finland pushing to limit systemic risk in the
eurosystem — he accepts as the most sensible of the three, reading into it a change in the
line on EU fiscal coordination and active ECOFIN work.

**The national distinction matters throughout.** Central banks' net interest income turned
negative when tightening followed the purchase programmes, producing real losses rather than
accounting ones. The Bank of Finland covered a round zero result plus operating costs out of
reserves running to several billion; many euro-area peers had no buffers or have eaten them.
Against that, the Bank's own demure reminder that it has paid the state over three billion in
dividends during the euro era is now in question.

**An institutional contradiction is named but not resolved.** The Act on the Bank of Finland
states independence and the ECB linkage unambiguously; the constitution still carries the
spirit in which the Bank sits in connection with parliament, where historically the
Parliamentary Supervisory Council had real influence. Both agree the larger point: central
bank independence in this form is not divine truth, the US mandate has more pillars than
inflation, and a central bank is ultimately one institution of a state that grants it its
mandate.

**On whether Greece could repeat**, Miettinen recalls the ECB being repaid in full on its
Securities Markets Programme holdings in the Greek restructuring — a shared recapitalisation
in effect — and the era's sterilised policy of shorting to neutralise the position. Tested
against an Italian scenario, Ahokas's answer is that rates return to zero and margins
improve; Miettinen adds that the binding constraint on balance sheet expansion is rising
inflation, not negative equity, and that against stagflation modern policy is disarmed.

**The closing forecast is the best analytical passage.** Ahokas thinks a soft landing more
likely than it looks, because monetary tightening has been offset by fiscal loosening: the US
is running a bigger deficit this year than last, on the order of 60 per cent of covid-year
levels, and an economy pumped that hard does not fall into recession over rates. Europe is
more cautious. Finland's own stance he and Miettinen read as close to neutral once the
debt-financed three billion rail package is set against the spending cuts — and the tax
package as distributionally regressive, which lowers the marginal propensity to consume.

## A note on the source

There are no gaps in the transcription, and the transcript carries no speaker labels, but with
a single guest the speakers are reliably distinguishable. The cleaned Finnish cue file corrects
proper names and technical terms the automatic transcription mangled, including the ECB's
Securities Markets Programme, transcribed as "S&P". A figure given for the age of Robinson's
book was garbled and is not repeated here.

## Watch

The recording lives on the Neuvottelija channel:
[Suomen Pankki haastoi hallituksen | Jussi Ahokas | Neuvottelija 197](https://www.youtube.com/watch?v=IF6Qa_vnnus).
A Finnish edition of this episode is published at
[www.neuvottelija.fi](https://www.neuvottelija.fi/fi/episodes/289-suomen-pankki-haastoi-hallituksen-jussi-ahokas-neuvottelija).

---

Cite as: Sami Miettinen, Neuvottelija — The Bank of Finland Challenged the Government | Jussi Ahokas | Neuvottelija 197, https://www.neuvottelija.com/podcast/episodes/ep197-suomen-pankki-haastoi-hallituksen-jussi-ahokas/, 2023-06-19. For quotes include episode 197 and timestamp.