Monthly Report No. 12/2018

Amat Adarov, Mario Holzner, Olga Pindyuk and Goran Vukšić

No 2018-12, wiiw Monthly Reports from The Vienna Institute for International Economic Studies, wiiw

Abstract: Graph of the month Openness of CESEE economies, 2017 Opinion corner What can be expected from the Strategy for the adoption of the euro in Croatia? by Goran Vukšić European financial markets ten years after the global crisis by Amat Adarov As of end-2018, while Europe is generally enjoying robust economic growth, the outlook is clouded with downside risks emanating from macroeconomic and political challenges. In some countries high non-performing loans remain an issue, while in others ample liquidity on account of years of ultra-easy monetary policy reinforced potentially unsustainable dynamics in certain asset markets. This highlights the need to accelerate reforms focusing on the resilience and sustainability of European financial market architecture – still largely dominated by banks – in line with the Banking Union and the Capital Markets Union initiatives. The process of financialisation in Central, East and Southeast Europe by Mario Holzner Financialisation has been particularly strong in the three small Baltic states, followed by countries from CEE and, at a certain distance, by economies of SEE and the CIS. This pattern can be observed in the deregulation indicator as well as in different indicators of foreign financial inflows. However, an important distinction can be made with regard to the structure of inward FDI stocks in the CESEE region. Deleveraging in CESEE continues by Olga Pindyuk The quantitative easing launched by the ECB was supposed to provide liquidity to the banking sector in order to make it easier and cheaper for banks to extend loans to companies and households. By now it has mostly failed to achieve this goal as foreign banks in CESEE have not restored their pre-crisis positions. Financial institutions in many countries of the region have carried on liquidity hoarding and restrained credit expansion, while both non-financial corporations and households have continued deleveraging despite low interest rates on loans. Monthly and quarterly statistics for Central, East and Southeast Europe

Keywords: economic openness; euro adoption; Stability and Growth Pact; financial markets; non-performing loans; banking union; capital markets union; financial deregulation; capital inflows; asset prices; level of indebtedness; deleveraging; liquidity hoarding; saving ratio (search for similar items in EconPapers)
Pages: 45 pages including 37 Figures
Date: 2018-12
New Economics Papers: this item is included in nep-mac and nep-tra
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