Macroeconomic and financial stability challenges for acceding and candidate countries

Adalbert Winkler, Klaus-Dieter Geisler, Pedro del Río (), Cyril Pouvelle, Brian Golden, Marina Vasjukova, Zoltán Szalai, Miquel Dijkman, Anca Adriana Gǎlǎţescu, Matjaž Noč, Cristiana de-Alessi, Tina Winther Frandsen, Adam Gersl, Peter Backé, Oscar Calvo-Gonzalez, Roland Beck, François Gurtner, Zbigniew Polański, Rita Bessone Basto, Jorim Schraven, Jorge da Silva, Anthony de Lannoy and Kalin Hristov

No 48, Occasional Paper Series from European Central Bank

Abstract: This paper - based on a report by a Task Force established by the International Relations Committee (IRC) of the European System of Central Banks (ESCB) - reviews macroeconomic and financial stability challenges for acceding (Bulgaria and Romania) and candidate countries (Croatia and Turkey). In an environment characterised by strong growth and capital inflows, the main macroeconomic challenges relate to the recent pick-up of inflation and the large and widening current account deficits. Moreover, rapid credit growth has been a recent feature of financial development in all countries and thus constitutes the main financial stability challenge. In general, monetary authorities have responded to these challenges by tightening monetary conditions and prudential standards, with concrete measures also reflecting the different monetary and exchange rate regimes in the region. The paper also highlights four specific features of fiancial development in the countries under review, namely the dominance of banks in financial intermediation, the strong participation of foreign-owned banks, the widespread use of foreign currencies and the strengthening of supervisory frameworks. JEL Classification: E65, G21, G38, O16, P27

Keywords: credit growth; Financial Stability; macroeconomic performance; South-East Europe (search for similar items in EconPapers)
Date: 2006-07
Note: 508510
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:200648

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