Finland

Finland initially put its emphasis on exchange rate targeting, with a harder commitment from 1983, but the EMS upheavals and the associated banking crisis forced it to float. At that point it turned to inflation targeting, which was supplemented in the final years before EMU by exchange rate targeting as well, within the ERM.

Years Targets and attainment Classification
1974-82 exchange rate initially kept stable with reference to basket of currencies; basket, peg and margins explicit from November 1977; weights in basket change over time, also margins (varying between +/- 2.25% and +/- 3%); devaluations 1977 (twice), 1978, 1982, also some small revaluations; monetary policy concerned with growth and employment, policy operated mainly through central bank discounting facility, plus controls over bank interest rates, in way which obliges banks to ration credit loose exchange rate targeting LERT
1983-92 exchange rate commitment firmer and monetary policy focused more on exchange rate; unilateral peg to ECU with +/-3% band from June 1991 to September 1992 then currency floated in forex plus banking crisis; monetary policy initially mainly via central bank discounting but financial liberalisation shifts operation towards standard indirect instruments, particularly OMOs in CD market full exchange rate targeting FERT
1993-96 point inflation targets set early 1993 for 1995 onwards, undershot by up to 2%;  exchange rate floating; continued liberalisation leads to better indirect monetary instruments full inflation targeting FIT
1997-98 inflation targets undershot by c. 1%; ERM membership from October 1996 (designed to ensure entry to EMU) inflation with exchange rate targeting IwERT
1999-2014 membership of European Monetary Union currency union CU

Selected IMF references: RED 1978 pp35, 76-7; RED 1982 pp27-9, 49-50; RED 1984 pp41, 66-7, Appendix; RED 1988 pp34-7; RED 1990 pp39-40, 59-60; SBISA 1994 pp26-9; RED 1995 pp44-7.

Additional source: Houben (2000, especially pp 211-14, 304-5).

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