September 26, 2014
IMF COMMUNICATIONS DEPARTMENT |
| Media Relations |
|---|
| E-mail: media@imf.org |
| Phone: 202-623-7100 |
On September 25-26, 2014, governors and vice governors of central banks from Central, Eastern, and Southern European countries (CESEE) and elsewhere in Europe, officials of other international financial institutions, and leading academics met in Portoroz, Slovenia, to discuss options to promote a sustained recovery in credit growth in the region. During the high-level conference, organized jointly by the International Monetary Fund (IMF) and Bank of Slovenia, participants emphasized the importance of generating conditions to avoid “credit-less” recoveries, which are often associated with prolonged periods of slow output and employment growth.
During the discussions, participants acknowledged the incipient economic recoveries, particularly in some countries, and agreed that the immediate risks of a new financial crisis for the region appear generally contained. Nevertheless, they stressed that, for much of the region, current credit and output growth remained too low and recognized that much remains to be done if the pace is to increase considerably and on a sustainable basis. Therefore, there was broad consensus on the need to press ahead with sustained efforts on several fronts.
Participants considered that further and sustained efforts to repair banks’ balance sheets, as well as those of households and nonfinancial corporations, is critical to unlock higher growth potential. They also saw a possible role for specific measures to promote credit growth, including by developing domestic capital markets, provided that they were designed in a manner that avoided financial distortions. The potential impact of regulatory reform and foreign bank engagement on capital flows and credit growth in the CESEE area was also discussed. Participants agreed that, on balance, these effects would be positive, and that risk could be mitigated through close coordination between home and host authorities.
The seminar highlighted the multifaceted nature of the challenges facing policy makers. It was clear that there is no “one-size-fits-all” solution and that sustained efforts will be needed. All dimensions of the problem would have to be addressed. To this end, reform efforts and coordination between government agencies, central banks, and other stakeholders will be essential.
