This report assesses banking developments in Central and Eastern Europe and identifies the critical policy choices that will determine whether a country is to follow a high growth path leading to convergence with the mainstream of Western Europe.

Financial industries in central, eastern and south-eastern Europe have undergone dramatic changes over the past decade. Foreign direct investment contributed to the development of market-oriented banking and financial systems able to support the rapid pace of economic growth in these countries. Policymakers, academics and private sector analysts have contributed to this volume with their stimulating insights on a broad range of issues, from recent credit booms to the cross-border integration of banking and capital markets. Anyone who wants to understand how finance, growth and financial stability interact in transition economies should read this book. Mario Draghi, Governor of the Banca d Italia and Chairman of the Financial Stability Forum This book highlights the achievements and challenges of the ongoing process of financial integration in Europe. The financial integration of Europe is both welcomed as an economic driving force and watched with concern as a source of potential stability. After all, changing financial, regulatory and corporate ownership structures are fuelling competition, capital mobility and financial intermediation, but at the same time creating new systemic risks. With a special focus on Central, Eastern and South-Eastern Europe, the contributors to this book explore a wide spectrum of underlying issues, including the finance-growth nexus, credit boom patterns, the implications of foreign bank entry modes, lessons learned from old EU member states and commercial bank strategies. Authoritative views from central bank officials and policymakers are complemented with a special focus on empirical and econometric evidence from academia as well as practical insights from key financial market players. This unique collection will be of great interest to economists and experts in the fields of financial markets and European integration from central, commercial and investment banks, governments, international organizations, universities and research institutes.

Transition countries have become one of the most dynamic segments of the global economy in recent years. With economic growth rates at considerably higher percentages than those of the world economy, these countries are a strong and vital element of global stability. Professor Irakli Kovzanadze, a doctor of economic sciences, provides a comprehensive analysis of the socioeconomic factors of development in transition countries with regard to history and geopolitics. He specifically analyzes the stages, legalities, and particulars of economic and banking system progress and considers the impact of financial globalization on these countries during a transition-to-market economy. Kovzanadze's study delves into the progress and problems relating to integration of Central and Eastern European countries into the European Union and includes detailed scrutiny of the trends and prospects of economic and banking system development in Central and Eastern Europe, the Baltic region, and former Soviet Union countries with particular emphasis on economic growth in Georgia. Kovzanadze's careful examination of the dramatic events that have occurred in transition countries during the last few years will promote further discussion within the banking, macroeconomics, and geopolitical communities on the innovative ways to reform an economy in countries in the midst of change.

This book charts the process of financial market reform in Central and Eastern Europe. Topics discussed will include the implications of future EU membership, and the strategies pursued by the World Bank and International Monetary Fund.