The Euro and Economic Stability
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The Euro and Economic Stability

Focus on Central, Eastern and South-Eastern Europe

Edited by Ewald Nowotny, Peter Mooslechner and Doris Ritzberger-Grünwald

The Euro and Economic Stability assesses the euro area’s merits as a shelter and the merits of euro assets as a safe haven and reviews the case for rapid euro adoption from a post-crisis view. Policymakers and economists provide relevant lessons from euro area divergences for future euro area members and, more generally, from the financial crisis, while banking representatives discuss post-crisis business models of banks in the area. Last but not least, a theoretical introductory chapter fills the gap between mainstream macroeconomic modelling and real-world decision-making.
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Chapter 17: Post-crisis Business Models of Banks in CEE – The Case of Intesa Sanpaolo

György Surányi


György Surányi It is well known that the Central and Eastern European (CEE) countries used to outperform the industrial economies when it came to growth rates and potential growth rates (see Figures 17.1 and 17.3). Their growth models, especially those of small open economies, were pretty simple. We were convinced that if growth was dependent on exports and investments (see Figure 17.2) on the one hand, and on the fast inflow of foreign capital on the other hand, the results would be a given. This growth model has been seriously hurt throughout the crisis and is now being questioned severely. Even if the critics are right, I believe that it would be wrong to simply drop the model – much rather, we should revise it. If we take the investment and exports figures in the pre-crisis period, they are impressive, just like the catching-up process has been impressive in terms of real convergence. However, it is obvious that the distance is still sizeable, and this should inform our interpretation of the data. If we take, for instance, the current account, it must be said that the current account deficits were in line with the growth model (see Figure 17.4). There was an ever growing external imbalance, which finally turned out to be unsustainable. And much to many observers’ and analysts’ surprise, the current account imbalances were not primarily driven by fiscal profligacy, or by vague fiscal policies (see Figure 17.5). On the contrary, especially the Commonwealth of Independent States...

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