Rita Bessone Basto
- 1 July 2005
- OCCASIONAL PAPER SERIES - No. 32Managing financial crises in emerging market economies - experience with the involvement of private sector creditorsDetails
- Financial crises in emerging market economies are often accompanied by difficulties of the sovereign to honour its contractual obligations. The official sector may reduce the likelihood of a disorderly outcome by extending financial assistance but there are limits to official sector involvement, not least because the potential volume of IMF lending is small compared to private capital flows and because a large "bail out" by the official sector would lead to moral hazard. For both these reasons - limited official funds and moral hazard - private sector creditors need to share some of the financial burden and thereby actively get involved in the management of financial crises in emerging market economies. The purpose of this report is to review the instruments that may promote such private creditor involvement as well as to provide a stock-taking of past experience and identify areas of possible improvement to the framework for crisis resolution.
- JEL Code
- F33 : International Economics→International Finance→International Monetary Arrangements and Institutions
F34 : International Economics→International Finance→International Lending and Debt Problems
- 4 July 2006
- OCCASIONAL PAPER SERIES - No. 48Details
- 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 Code
- E65 : Macroeconomics and Monetary Economics→Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook→Studies of Particular Policy Episodes
G21 : Financial Economics→Financial Institutions and Services→Banks, Depository Institutions, Micro Finance Institutions, Mortgages
G38 : Financial Economics→Corporate Finance and Governance→Government Policy and Regulation
O16 : Economic Development, Technological Change, and Growth→Economic Development→Financial Markets, Saving and Capital Investment, Corporate Finance and Governance
P27 : Economic Systems→Socialist Systems and Transitional Economies→Performance and Prospects