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Macro-prudential Instruments in Eastern European and Balkan Countries


  • Orkida Ilollari (Findiku)

    () (European University of Tirana, Albania)


As most of the countries around the world, even in Eastern Europe it became necessary to implement the policy and macro-prudential instruments. The measures adopted by the authorities varied and they consisted in controlling the banks’ loans issued in the foreign currency. Foreign currency lending was the main feature which was strengthened even more during the credit boom of the past decade. The policymakers in the region were clear about the need for development of the capital markets in local currency, in such a way that banks were to shrink for foreign currency funding and long-term maturities. It is obvious that macro-prudential instruments and policies varied amongst countries. This is due to the fact that each country has different problems of the macroeconomic nature and in the financial system. According to the report of IMF (2011b) when applying macro-prudential instruments should be noted that the same measures are not equally effective in all countries where they are applied. The instruments used have had a positive effect, namely the reduction of lending and liquidity coverage. It is important to realize that the degree of effectiveness of instruments does not depend on the stage of economic development or the exchange rate. So, the emerging economies that have fixed exchange rate and limited interest rate tend to use macro-prudential instruments. The same tools are equally effective when used in developed countries with flexible exchange rate regimes. The implementation of macro-prudential instruments costs that must be taken into account when calculating the benefits from these instruments (IMF, 2011a). The liquidity instruments that are used in Eastern European countries demonstrated that they were effective in limiting the financing in foreign currency. In this context, the instruments relating to capital may be helpful for limiting the credit growth (IMF, 2011b).

Suggested Citation

  • Orkida Ilollari (Findiku), 2015. "Macro-prudential Instruments in Eastern European and Balkan Countries," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 10(2), pages 58-64, December.
  • Handle: RePEc:rse:wpaper:v:10:y:2015:i:2:p:58-64

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    References listed on IDEAS

    1. Mishkin, F S., 2008. "How should we respond to asset price bubbles?," Financial Stability Review, Banque de France, issue 12, pages 65-74, October.
    2. Frederic S. Mishkin, 2011. "Monetary Policy Strategy: Lessons from the Crisis," NBER Working Papers 16755, National Bureau of Economic Research, Inc.
    3. Gabriele Galati & Richhild Moessner, 2013. "Macroprudential Policy – A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 27(5), pages 846-878, December.
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    More about this item


    micro–prudential regulation; systemic stability; macro–prudential regulation exogenous risks;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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