This paper reviews and assesses financial stability challenges in countries preparing for EU membership, i.e. Albania, Bosnia and Herzegovina, Kosovo, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and Turkey. The paper focuses on the period since 2014 and on the banking sectors...

The paper investigates firms' willingness to match the currency composition of their assets and liabilities and their incentives to deviate from perfect matching. Using detailed information at the loan contract level for the Hungarian non-financial corporate sector, the paper provides strong...

At the 25th anniversary of the Maastricht Treaty, this paper reviews the merits of introducing a safe sovereign asset for the eurozone. The triple euro area crisis showed the costly consequences of ignoring the "safety trilemma". Keeping a national safe sovereign asset (the German bund) as the...

The post financial crisis period has been associated with increased countercyclical use of various financial policies, including residency-based measures. This paper analyses in a single analytical framework the relative effectiveness of three types of financial policies – macroprudential...

This paper examines whether the level of reserves in emerging market countries has become excessive. It presents a discussion of "adequacy" versus "excessive" levels of reserves, and presents calculations of reserve adequacy for a large number of emerging market countries. Two categories of...

This paper studies the role of the financial sector in affecting domestic resource allocation and cross-border capital flows. I develop a quantitative, two-country, macroeconomic model in which banks face endogenous and occasionally binding leverage constraints. Banks lend funds to be invested...

Following Chairman Ben Bernanke’s comments before Congress that the FOMC may ‘take a step down in the pace of asset purchases if economic improvement appears to be sustained’, US 10-year interest rates picked up sharply and gross capital flows to emerging market economies (EMEs) reversed....

We assess the role played by exchange rates in buffering or amplifying the propagation of shocks across international equity markets. Using copula functions we model the joint dependence between exchange rates and two global equity markets and, from a copula framework, we obtain the conditional...

Based on the “ABC” approach targeted to assess all available sources of financing (official development finance, private investment, domestic resources, and remittances), the Viet Nam country pilot study explores the challenges of transition finance in a middle-income country in the...

This study investigates transition finance in Lebanon, an upper middle-income country in the MENA region transitioning from a significant adverse shock. Lebanon’s development path has been historically non-linear and, most recently, the Syrian conflict adversely affected the country’s...