Financial vulnerabilities in emerging Europe : an overview

Abstract

Against the backdrop of the international financial and economic crisis, this paper seeks to identify financial vulnerabilities in Emerging Europe. Data are presented for 20 countries using a 'balance-sheet' framework to disaggregate financial weaknesses within each economy. First, financial flow imbalances and general macroeconomic weaknesses are identified, leading to a discussion of the financial stock imbalances that were caused by these persistent flow imbalances. The paper concludes with an assessment of which countries are most vulnerable to any potential 'sudden-stop' of financial flows to the region. Key words: financial crisis, balance-sheets, emerging economies, Emerging Europe