'The new financial supervision framework at EU level must be enforced without delay and development of the regulatory framework should concentrate on creating a specific crisis resolution regime for banks', Liikanen said.
The Bank of Finland's financial stability report said there are still dangers to the financial markets and said more transparency is needed in the field as it internationalises.
The most notable risks to financial stability are a prolonged recession, banking becoming dependent on support measures and having too little capacity when economic growth picks up.
Moreover, if the regulatory framework is not fully reformed it could leave the financial system with structural shortcomings, the Bank of Finland said.
Currently, reform emphasis is on preventing and mitigating systemic risk, the eurosystem central bank said.
'When developing regulations the main emphasis should be on creating a specific crisis resolution regime for banks,' the report said. 'It needs to be possible to intervene in time when banks run into problems.'
Exit from financial sector support measures must be carefully coordinated at international level and carried out in stages, it also said, and added some banks might have to go out of business.
'Banks in crisis need to either be brought back to health or unwound in order to return the markets to normal and to avoid distortions in competition.'
(Reporting by Brett Young) Keywords: BANKOFFINLAND/ (brett.young@reuters.com; +358 9 6805 0242; Reuters Messaging: brett.young.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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