Lost & Found in Eastern Europe: Replacing Funding by Western Europe’s Banks

With Western Europe’s banks under pressure, where does this leave Europe’s emerging economies and their financial systems that are dominated by subsidiaries of these very same banks?  There is little doubt that the era of generous parent-funding for subsidiaries is over.  But parent bank deleveraging—selling off assets, raising capital, and reducing loans, including to their subsidiaries—need not […]

Growing Pains: Europe’s Dilemma

As the crisis in Europe deepens, it is worth asking how it all went wrong in the first place. In the past decade there have been stark differences in per capita GDP growth in Europe. Growth rates have ranged from close to zero in Italy and Portugal to more than 4 percent in the best […]

Old Dilemmas, New Challenges: Monetary Policy and Capital Flows into Emerging Economies

For all the talk today about capital flows into emerging economies, the topic has actually been debated for many years within the IMF. For a decade or more, we have grappled with the idea that very large capital flows into successful emerging market countries were almost inevitable and would prove extremely difficult to manage. And […]