The Bank of Finland said it was reducing restrictions on the use of money market rates as reference rates for loans. The Bank would start quoting money market rates referred to as HELIBOR (Helsinki Interbank Offered Rate). Banks may henceforth use these as reference rates in their lending it said. From May 1 the banks would be allowed without special central bank approval to use as a reference rate not only its base rate but also other Bank of Finland rates or the official money market rate used in market transactions. A derivative of these could also be used the statement said. But housing loans would be excepted and their lending rate would as formerly be linked directly or indirectly to the Bank of Finlands base rate. The new guidelines involve mainly two changes. Money market rates in future would be used as reference rates for loans with a maturity of over five years and the introduction of a new reference rate would no longer require central bank approval. The decision was made as a continuation of the central banks process of liberalisation it said.
BANK OF FINLAND EASES REFERENCE RATE RESTRICTIONS