Financial Cycles and the Real Economy
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Financial Cycles and the Real Economy

Lessons for CESEE Countries

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

What is the link between the financial cycle - financial booms, followed by busts - and the real economy? What is the direction of this link and how salient is this connection? This unique book examines these fundamental questions and offers a paramount contribution to the debate surrounding the recent financial and economic crisis.
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Chapter 15: Building resilient financial systems in the CESEE region

Katia D’Hulster


This chapter will focus on the World Bank’s activities aimed at strengthening financial sector resilience in the Central, Eastern and South-Eastern Europe (CESEE) region. It will provide answers to two main questions. First, what does the World Bank do to make the region more resilient to financial shocks? And second, what remains to be done to remove existing financial sector vulnerabilities? Following the severe global banking crisis of 2008–2009, immediate short-term stability and liquidity issues in Europe were primarily addressed by the International Monetary Fund (IMF), the European Union (EU) and the World Bank. A need to help countries to navigate complex financial sector stability and development issues over the longer term was identified. It was agreed that the effective delivery of best-practice financial sector technical advisory services to European candidate and neighbourhood countries would be best achieved through the creation of a dedicated technical unit of the World Bank’s Europe and Central Asia (ECA) Region Financial and Private Sector Development Department located in Vienna. Geographical proximity to prospective beneficiary countries and key EU institutions, as well as the targeted focus on financial sector technical assistance, played a vital role in the close coordination with all stakeholders and the establishment of a long-term, flexible, high-quality technical assistance capacity in the region.

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