Nordic Baltic Crisis Simulation Exercise, 2024

News 20 September 2024

To test the preparedness for a potential crisis situation, authorities from the Nordic-Baltic countries responsible for financial stability during this week conducted a financial crisis simulation exercise in the Nordic-Baltic region, involving three fictitious banks with cross-border activities.

Nearly 450 participants took part in the exercise, representing authorities from Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden, as well as the relevant European Union authorities: European Commission, ECB, Single Resolution Board (SRB) and European Banking Authority (EBA). A staff member of the International Monetary Fund was also invited to participate as an observer.

The purpose of the exercise was to test communication, information sharing and collaboration between the authorities during crisis management in a highly uncertain and time pressured environment. The exercise was designed in line with a crisis scenario where the fictitious banks went through three phases that could be foreseen in a bank crisis management process:

1) the transition from normal business to recovery including addressing liquidity issues,

2) the movement from recovery to resolution, with resolution authorities assuming control of the bank and

3) after resolution, the return of the restructured bank to the market.

During the exercise, authorities applied the tools and powers at their disposal according to the EU regulatory framework for banking supervision and crisis management. 

Following the successful conclusion of the exercise, authorities will document and share the lessons learnt, and will integrate them into their existing crisis management routines. This will strengthen their crisis preparedness and further enhance the crisis management framework in the Nordic-Baltic region.

A preparation team established under the Nordic Baltic Stability Group (NBSG) and led by the Danish resolution entity Finansiel Stabilitet was formed in 2023 to prepare the exercise. The team was advised by Oliver Wyman in the preparation of the exercise. The NBSG consists of government ministries, central banks, supervisory authorities, and resolution authorities in the eight Nordic and Baltic countries. In the context of the NBSG, the Nordic and Baltic authorities have agreed to conduct regular financial crisis simulation exercises.