Vulnerabilities in Emerging Southeastern Europe

Vulnerabilities in Emerging Southeastern Europe—How Much Cause for Concern?

October 1, 2007

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Format: Chicago

Vulnerabilities in Emerging Southeastern Europe—How Much Cause for Concern?, (USA: International Monetary Fund, 2007) accessed December 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

While large inflows of capital into Southeastern Europe (SEE) have raised incomes, this has increased vulnerability to financial risks, which, if realized, can lead to costly adjustments. Traditional vulnerability indicators in SEE have reached levels that in other countries have not been sustainable, and sectoral analysis shows rising imbalances and raises questions about efficient use of the inflows. While factors related to EU integration mitigate these vulnerabilities, weaker institutions reduce these benefits in SEE compared to more advanced European emerging markets. To insure against setbacks to income convergence, SEE policymakers should take measures to reverse the buildup of vulnerabilities.

Subject: Banking, Credit, Currencies, Emerging and frontier financial markets, Foreign banks

Keywords: Balance sheet, EU integration, Exchange rate, Foreign currency, Parent bank, SEE country, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/236
Stock No:

WPIEA2007236
ISBN:

9781451868005
ISSN:

1018-5941

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