Banking Sector Systemic Risk in Selected Cenral European Countries. Review of: Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia

The paper is an attempt at a comparative overview of banking sector systemic risk in six Central European countries as of the end of 1997 concluding with some policy recommendations. The countries covered by the paper (Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia) are specific by the fact that in the early 1990’s they moved from a socialist to a market economy and the legacy of a socialist economy still has an important influence in the shape of their banking sectors. All six countries underwent banking crisis in 1990s and spent significant budgetary resources to deal with them. Crises have been overcome without system destabilization only in Hungary and Poland. Now, the banking sectors in these two countries are relatively robust although small in relation to GDP. In Bulgaria a banking crisis ended with a major destabilization, dramatic downsizing of banking assets and a deep recession. Presently, the banking sector is reported to be liquid and solvent and the potential for assets quality deterioration is limited for some time. Romania, the Czech Republic and Slovakia have yet to deal with their continuing banking crises, which still constitute a danger for economic stability and development.banking sector, systemic risk, Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia

Controlled dismantlement of the euro area in order to preserve the European Union and Single European Market

The Eurozone crisis mobilises an appreciable amount of the attention of politicians and the public, with calls for a decisive defence of the euro, because the single currency's demise is said to be the beginning of the end of the EU and Single European Market. In our view, preserving the euro may result in something completely different than expected: the disintegration of the EU and the Single European Market rather than their further strengthening. The fundamental problem with the common currency is individual countries' inability to correct their external exchange rates, which normally constitutes a fast and efficient adjustment instrument, especially in crisis times. Europe consists of nation states that constitute the major axes of national identity and major sources of government's legitimisation. Staying within the euro zone may sentence some countries - which, for whatever reason, have lost or may lose competitiveness - to economic, social and civilizational degradation, and with no way out of this situation. This may disturb social and political cohesion in member countries, give birth to populist tendencies that endanger the democratic order, and hamper peaceful cooperation in Europe. The situation may get out of control and trigger a chaotic break-up of the euro zone, threatening the future of the whole EU and Single European Market. In order to return to the origins of European integration and avoid the chaotic break-up of the euro zone, the euro zone should be dismantled in a controlled manner. If a weak country were to leave the euro zone, it would entail panic and a banking system collapse. Therefore we opt for a different scenario, in which the euro area is slowly dismantled in such a way that the most competitive countries or group of such countries leave the euro zone. Such a step would create a new European currency regime based on national currencies or currencies serving groups of homogenous countries, and save EU institutions along with the Single European Market

The Syndrome of Long-Term Loss of Competitiveness. The Risk That Should Prevent Poland from the Euro Adoption

W raportach Borowskiego (2004) i NBP (2009) szacowano, że przynależność do strefy euro zwiększy tempo wzrostu PKB w Polsce. Te szacunki nie odpowiadają jednak aktualnemu stanowi wiedzy i wymagają weryfikacji. Jednym z elementów takiej weryfikacji powinno być uwzględnienie ryzyka „syndromu długotrwałej utraty konkurencyjności międzynarodowej”, tj. sytuacji, gdy w wyniku braku możliwości dostosowania kursu walutowego, kraj zmuszony jest prowadzić politykę deflacyjną, przez co obniżenie PKB traci charakter cykliczny i staje się zjawiskiem strukturalnym, a gospodarka stabilizuje się na poziomie znacznie poniżej potencjału. Uwzględnienie tego typu ryzyka zasadniczo zmienia bilans kosztów i korzyści przyjęcia euro i może spowodować, że wejście do strefy euro przestaje być racjonalne.In the reports prepared by Borowski (2004) and the National Bank of Poland, NBP (2009), it was estimated that the being part of the euro zone would have increased the rate of GDP growth in Poland. However, those estimates do not correspond with the present state of knowledge and require verification. One of the elements of such verification should be the consideration of the risk of the “syndrome of long-term loss of international competitiveness”, i.e. the situation when, in result of the lack of possibilities to adjust the exchange rate, the country is forced to run its deflationary policy, due to which the GDP decline loses its cyclical nature and becomes the structural phenomenon and the economy stabilises at a level significantly below the potential. Taking into account this type of risk basically changes the balance of costs and benefits of the euro adoption and may have caused that the entry to the euro area ceases to be reasonable

New Pact for Europe : national report : Poland

This report is inspired by the discussions of the Polish National Reflection Group enriched by exchanges with National Reflection Groups from Italy and France. It reflects on the "state of the Union" from a national perspective and discusses the main challenges the EU and its members are facing, taking into account both the European and national perspective. Finally, it proposes ideas and recommendations how the EU and its members should react to these main challenges and lays down how the EU and European integration should develop in the years to come. This paper is part of a series of ten national reports. These reports and the debates in the Member States will provide a solid basis for the discussions in the NPE European Reflection Group. The latter will be asked to bring the reflection a step further through in-depth and thorough discussions at the European level. The Advisory Group chaired by Herman Van Rompuy will provide input to this process. All these reflections will lead to a final NPE report analysing the current "state of the Union" and making proposals on how to re-energize the European project in the years to come. It will be published at the end of 2017