Monetary Policy in Central and Eastern Europe: Lessons After Half a Decade of Transition

IMF Working Papers, September 1, 1996

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Canonical URL: Monetary Policy in Central and Eastern Europe: Lessons After Half a Decade of Transition

Uses data from transition economies in Central and Eastern Europe to assess four questions:
- (i) Did the standard blueprint for stabilization work, and was it implemented?
- (ii) To what extent was normal macroeconomics impeded by solvency problems in banks, and how successful have been policies to improve incentives within banks?
- (iii) Could financial markets and other infrastructure for monetary policy have been developed more quickly?
- (iv) How should transition economies respond to the monetary inflows that typically accompany success?
Concludes by evaluating the changing advice offered by external agencies during the 1990s.

Stabilization blueprint:
- Assessment focuses on whether the standard blueprint for stabilization worked and whether it was implemented in transition economies in Central and Eastern Europe.
Banking sector solvency and incentives:
- Examines the extent to which normal macroeconomics was impeded by solvency problems in banks.
- Evaluates how successful policies have been in improving incentives within banks.
Development of financial markets and monetary policy infrastructure:
- Investigates whether financial markets and other infrastructure for monetary policy could have been developed more quickly.
Managing capital inflows:
- Addresses how transition economies should respond to the monetary inflows that typically accompany success.
External advice:
- Evaluates the changing advice offered by external agencies during the 1990s.