Interviewed on Yle TV1 on Saturday morning, the Governor of the Bank of Finland pointed out that history is the best teacher also in economics: if the core of the financial system causes a deep economic collapse, that collapse will last a long time.
"I've seen estimates that dealing with the crisis could take up to ten years. If so, then we are half way. Indeed the road to recovery is a long one and the last miles are tough."
A decade ago, there was confidence that the markets would regulate themselves and correct any mistakes. According to Liikanen, it has now been learned that the banking system cannot function without strong regulation.
"Banks are needed that have their own capital, and investor responsibility is needed. We can no longer live in a world where bank profits are private and their losses are turned over to the taxpayers," stated Liikanen.
The Bank of Finland chief pointed out that in Finland the taxpayers are not carrying the burden of the present economic crisis.
"One lesson of this crisis is that public sector finances should be kept in good shape. If that is not the case, we are squeezed even by minor set-backs. And now we’ve seen major set-backs."