The European Commission decided to approve a prolongation of the Finnish support scheme on Thursday to stabilize financial markets by providing guarantees to eligible financial institutions.

The European Union (EU)'s executive arm said it found the measure, initially approved last November, to be in line with EU rules on state aid to overcome the financial crisis.

In particular, the measure as amended is limited in time and scope, it said.

The scheme aims at further stabilizing financial markets by ensuring financial institutions' access to financing, under which the temporal scope of guarantee has been extended to cover financial instruments issued until the end of this year and the material scope has also been broadened so that guarantees can now cover instruments with a maturity of up to five years, instead of three years.

"The prolongation of the guarantee scheme provides Finland with effective means of restoring confidence in the Finnish financial system and boosting interbank lending, while at the same time establishing safeguards to limit distortions of competition," said EU Competition Commissioner Neelie Kroes.