Banking sector development and financial stability in the run up to EU accession

Henk Brouwer, Ralph de Haas and Bas Kiviet
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Henk Brouwer: De Nederlandsche Bank
Ralph de Haas: De Nederlandsche Bank
Bas Kiviet: De Nederlandsche Bank

Macroeconomics from University Library of Munich, Germany

Abstract: The EU accession countries have made remarkable progress in developing their financial sectors. Nevertheless, potential risks to banking sector stability remain. We take stock of these risks, with a focus on the challenges posed by the EU accession process. Important potential risks we identify are consistently large current account deficits possibly combined with more volatile short-term financing in the future, imprudent financing of lending booms, increasing currency mismatches in the banking and corporate sector, substantial exchange rate volatility, and lagging legislation and supervision. Risks can be limited by taking advantage of the presence of foreign banks, keeping current account deficits within limits, taking financial stability considerations into account in determining exchange rate policies, guaranteeing the independence of the central bank and supervisory authorities, and strengthening the rule of law.

Keywords: EU accession; financial stability; banking system (search for similar items in EconPapers)
JEL-codes: E44 E61 F32 F36 G28 (search for similar items in EconPapers)
Date: 2002-09-11
New Economics Papers: this item is included in nep-eec, nep-fin and nep-ifn
Note: Type of Document - Word; prepared on PC; to print on HP;
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0209003

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