Banking sector development and financial stability in the run up to EU accession
AbstractThe EU accession countries have made remarkable progress in developing their financial sectors. Nevertheless, potential risks to banking sector stability remain. We take stock of these risks, with a focus on the challenges posed by the EU accession process. Important potential risks we identify are consistently large current account deficits possibly combined with more volatile short-term financing in the future, imprudent financing of lending booms, increasing currency mismatches in the banking and corporate sector, substantial exchange rate volatility, and lagging legislation and supervision. Risks can be limited by taking advantage of the presence of foreign banks, keeping current account deficits within limits, taking financial stability considerations into account in determining exchange rate policies, guaranteeing the independence of the central bank and supervisory authorities, and strengthening the rule of law.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Monetary and Economic Policy Department in its series MEB Series (discontinued) with number 2002-6.
Date of creation: Jun 2002
Date of revision:
EU accession; financial stability; banking system;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-08-17 (All new papers)
- NEP-CBA-2003-08-17 (Central Banking)
- NEP-EEC-2003-08-17 (European Economics)
- NEP-FIN-2003-08-17 (Finance)
- NEP-IFN-2003-08-17 (International Finance)
- NEP-MFD-2003-08-17 (Microfinance)
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