Central and Eastern Europe: New Member States (NMS) Policy Forum, 2014, Staff Report on Cluster Consultations—Common Policy Frameworks and Challenges
IMF Staff Country Reports, April 7, 2015
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- Central and Eastern Europe: New Member States (NMS) Policy Forum, 2014, Staff Report on Cluster Consultations—Common Policy Frameworks and Challenges
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Bibliographic details
- Published: April 7, 2015
- Series: IMF Staff Country Reports
Key issues and overview
- 2014 marked the tenth anniversary of accession to the EU of the first group of Central and Eastern European (CEE) countries.
- The first NMS Policy Forum (fall of 2014) created a platform for discussing policy frameworks and issues relevant for non-euro area NMS.
- Participants: Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania (NMS-6), the ECB, the European Commission, and the IMF.
- Main discussion themes: Euro adoption; opting into the Banking Union (BU) before euro adoption; the EU’s fiscal framework and pension reform; making the most of the EU single market and the EU Services Directive.
Euro adoption — findings and policy-relevant points
- Finding: A once sizeable country risk premium associated with joining the euro area has mostly vanished.
- Finding: The euro crisis exposed flaws in the euro area’s institutional framework.
- Tradeoffs illustrated by the crisis:
- Benefit: Monetary autonomy has proven helpful for absorbing shocks.
- Vulnerability: Foreign currency mismatches—that can be much reduced with euro adoption—have shown to be a key vulnerability.
- Preconditions for successful euro adoption:
- Flexible labor markets.
- Adequate fiscal and macro-prudential policy space.
- Income convergence.
Opting into the Banking Union before euro adoption — findings and policy relevance
- Finding: Lack of equal (or fully equivalent) treatment of BU members and non-euro area opt-ins reduces attractiveness of early opt-in.
- Specific differences cited:
- Role in the Single Supervisory Mechanism (SSM).
- Access to common liquidity and fiscal backstops.
- Countries most likely to benefit from early opt-in:
- Those seeking to enhance the quality and credibility of bank supervision.
- Those seeking access to larger industry-funded common backstops.
EU fiscal framework and pension reform — findings and recommendations
- Finding: In the wake of the crisis, many NMS abolished second pillar pension funds.
- Recommendation: Further reforms to the EU’s fiscal framework are warranted to:
- Remove disincentives for setting up and maintaining second pension pillars.
- More generally, remove disincentives for structural reforms.
Making the most of the EU single market and EU Services Directive — findings and policy priorities
- Recommendation: Structural reforms to strengthen human capital, skills matching, labor market efficiency, and the foreign investment environment will help NMS reap full benefits from EU integration.
- Finding/implication: Further liberalization of trade in services will likely benefit the NMS-6 more than other EU members.
Publication metadata and scope
- Subject areas: Balance of payments, Banking, Expenditure, Exports, Fiscal governance, Fiscal policy, Foreign direct investment, International trade, Macrostructural analysis, Pension spending, Structural reforms.
- Keywords: area country, Baltics, BU member, business cycle, Central and Eastern Europe, CR, Eastern Europe, EU services directive, Euro adoption, euro area, Exports, Fiscal governance, Foreign direct investment, Global, ISCR, Pension spending, single market, Structural reforms, transparency policy.
- Pages: 40
- Volume: 2015
- Issue: 097
- Series: Country Report No. 2015/097
- Stock No: 1CEEEA2015001
- ISBN: 9781475564457
- ISSN: 1934-7685
International Monetary Fund. European Dept. "Central and Eastern Europe: New Member States (NMS) Policy Forum, 2014, Staff Report on Cluster Consultations—Common Policy Frameworks and Challenges", IMF Staff Country Reports 2015, 097 (2015), accessed 9/12/2026