Vietnam's macroeconomic performance has been strong, fueled by strong export performance, poverty reduction, and domestic investment. Executive Directors welcomed this development, and stressed the need for strong monetary, exchange rate, and fiscal policies. They appreciated the prudent...

This paper examines Turkey’s Seventh Review Under the Stand-By Arrangement, and Requests for Waiver of Applicability and Nonobservance of Performance Criteria. Successful macroeconomic management delivered an impressive economic performance in 2003. However, budget slippages interrupted...

This paper evaluates Azerbaijan’s 2003 Article IV Consultation, Second Review Under the Poverty Reduction and Growth Facility (PRGF), and Requests for Waivers of Performance Criteria, Extension of Arrangement and Rephasing of Purchases. Performance relative to the quantitative targets...

This Financial System Stability Assessment on the Eastern Caribbean Currency Union (ECCU) reviews overall stability assessment. The fiscal position of the governments in the region has deteriorated sharply in recent years. A source of strength of the ECCU has been the large historical presence...

Activity and fiscal policy continue to exceed expectations, but strong bank credit growth has fuelled a sharp increase in the current account deficit. In this context, the new administrations recognize the need to establish the macroeconomic stability quickly. These actions are supported by...

This paper examines Pakistan’s Fifth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility (PRGF) and Request for Waiver and Modification of Performance Criteria. Although most reforms were broadly on track, there were setbacks in energy sector reforms,...

Using aggregate and bank level data for several countries, the paper studies what happens to the banking system in the aftermath of a banking crisis. Contemporary crises are not accompanied by declines in aggregate bank deposits, and credit does not fall relative to output, although the growth...

This paper uses a general equilibrium model to examine the central role played by commercial banks in intermediating and amplifying the capital flow shocks to the local economy in the 1997 Asia financial crisis. It finds that a sudden stop of capital inflows affects the equilibrium credit supply...

In this paper, we use the extreme value theory (EVT) framework to analyze contagion risk across the international banking system. We test for the likelihood that an extreme shock affecting a major, systemic U.K. bank would also affect another large local or foreign counterpart, and vice-versa....

There is a widespread view that bank capital requirements should be loosened during recessions and tightened during expansions to avoid excessive credit and output swings. This view is based on a partial analysis that ignores the effects of capital requirement policies on the saving decisions of...