A New Model for Balanced Growth and Convergence Achieving Economic Sustainability in CESEE Countries
Achieving Economic Sustainability in CESEE Countries
Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald
Chapter 14: Banks’ challenges in Central and Eastern Europe
The banking sector in Central and Eastern Europe (CEE) is facing historical challenges on several fronts. First of all, not only has banker-bashing by politicians become a daily exercise, but fiscal measures such as a banking tax or a financial transactions tax are endangering the basic business model of the entire financial sector. Moreover, these actions have come on top of the constantly increasing regulatory requirements imposed by local and European Union (EU) lawmakers since the outbreak of the recent financial crisis in 2008. Secondly, macroeconomic uncertainties are posing a substantial challenge, especially in countries with traditionally unbalanced growth dynamics reflected in excessive foreign currency borrowing, high levels of public debt or lending booms financed mainly by foreign funding. Therefore, countries with a relatively low inflation rate, low budget deficits and low public spending have not undergone major gross domestic product (GDP) downward adjustments.
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