Over the past decade policy makers in Latin America have adopted a number of macroprudential instruments to manage the procyclicality of bank credit dynamics to the private sector and contain systemic risk. Reserve requirements, in particular, have been actively employed. Despite their...

This 2013 Article IV Consultation highlights that after a brief stabilization in 2010, the recession in the Slovenia resumed in 2011 and the economy now has contracted for eight consecutive quarters. Although a sharp contraction in investment was the main driver of the downturn in the early...

Economic growth in Bosnia and Herzegovina (BiH) has been impressive with GDP. The dominance of foreign-owned bank subsidiaries has transformed the financial sector and altered the risks to financial stability. Reforms should focus on strengthening banking supervision and adapting it to the...

In this study, the risks related to the euro area sovereign debt crisis are analyzed. Methods used to implement the European Financial Stability Facility (EFSF) are overviewed, and the European Stability Mechanism (ESM), the European Systemic Risk Board (ESRB), and the European Supervisory...

Slovenia, among other euro area countries, experienced the largest economic contraction since 2008. The performance of Slovenian banks deteriorated markedly in recent years as a result of the unfavorable operating environment and weak governance. Despite some deleveraging, banks continued to...

This paper discusses key findings of the financial sector stability assessment for Romania. The assessment reveals that in recent years, Romania’s financial sector regulatory authorities have made significant progress in adopting international best practices, including through...

This paper discusses key findings of the detailed assessment of observance of financial sector standards and codes in Switzerland. Switzerland has a relatively unique banking sector, with a high market concentration by the two largest domestic banks. The overall assessment of the peer-review...

We model an economy in which domestic banks and firms face incentive constraints, as in Holmstrom and Tirole (1997). Firms borrow from banks and uninformed investors, and can collude with banks to reduce the intensity of monitoring. We study the general equilibrium effects of capital flows...

This paper reviews economic developments in the Republic of Belarus during 1994–96. After several years of efforts at structural reform and stabilization during which little progress was made, following presidential elections in mid-1994, the authorities adopted a wide-ranging adjustment...

The program of budget restraint and reduction of the quasi-fiscal losses, supported by the IMF's Stand-By Arrangement, was successful in bringing domestic demand down to sustainable levels, lowering inflation, and narrowing the current account deficit. The stabilization effort was supported by...