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

Author

Listed:
  • Henk Brouwer

    (De Nederlandsche Bank)

  • Ralph de Haas

    (De Nederlandsche Bank)

  • Bas Kiviet

    (De Nederlandsche Bank)

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.

Suggested Citation

  • Henk Brouwer & Ralph de Haas & Bas Kiviet, 2002. "Banking sector development and financial stability in the run up to EU accession," Macroeconomics 0209003, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0209003
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    References listed on IDEAS

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    Cited by:

    1. Alfred Steinherr & Ali Tukel & Murat Ucer, 2004. "The Turkish Banking Sector, Challenges and Outlook in Transition to EU Membership," Bruges European Economic Policy Briefings 9, European Economic Studies Department, College of Europe.
    2. Liliana Eva Donath & Laura Mariana Cismas, 2008. "Determinants of Financial Stability," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 11(29), pages 27-44, (3).
    3. Supreena Narayanan & Rashmi Dalvi, 2004. "Assessment of Financial Stability Reports:Sveriges Riksbank," Finance 0411040, University Library of Munich, Germany.
    4. Steinherr, Alfred & Tukel, Ali & Ucer, Murat, 2004. "The Turkish Banking Sector - Challenges And Outlook In Transition To Eu Membership," Economic and Financial Reports 2004/2, European Investment Bank, Economics Department.

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    More about this item

    Keywords

    EU accession; financial stability; banking system;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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