Finding ways to revive stagnant or contracting corporate and retail lending has been a key policy challenge across the transition region.
Hungary, for instance, has experienced a contraction in corporate lending by about 1.6 per cent of GDP over the past year, and surveys of credit conditions indicate a continued reluctance of credit officers to extend fresh funds.… Read more
Recent stress tests, while admittedly not perfect, have proven useful to bring a degree of clarity over banks’ portfolio quality. When backed by credible financing plans, the tests have helped confidence in battered banking sectors. In Europe two major regional exercises are under way: a CEBS-coordinated and nationally-implemented testing of the largest EU-based bank groups, and a regional exercise by the IMF, both with expected results around September.… Read more
We all know that most emerging market economies have limited policy room to deliver massive counter-cyclical crisis response. This affects their risk perception, investor confidence, and capital inflows. Indeed, most emerging markets have limited fiscal space (except for those with a war chest of international reserves such as China and several other Asian countries, or Chile in Latin America).… Read more
