International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance report makes recommendations regarding introduction of an effective framework for contingency planning and crisis management, including bank resolution and deposit guarantees, in Slovenia. It is recommended that a communication plan and strategy be developed, both within the Bank of Slovenia and at the national level, to speak with one voice during financial crises. The members of Co-ordination Group/Financial Stability Board (CG/FSB) must harmonize their efforts to carefully coordinate information, provide consistent communication to the public, and ensure that they use the same facts and assumptions. Whenever a crisis appears forthcoming, CG/FSB members should plan to deliver a media statement providing information in a constructive manner to reassure the public.
Central European accession countries (CECs) are currently considering when to adopt the euro. From the perspective of macroeconomic stabilization, the cost or benefit of giving up a flexible exchange rate depends on the types of asymmetric shocks hitting the economy and the ability of the exchange rate to act as a shock absorber. Economic theory suggests that flexible exchange rates are useful in absorbing asymmetric real shocks but unhelpful in the case of monetary and financial shocks. For five CECs-the Czech Republic, Hungary, Poland, the Slovak Republic, and Slovenia-empirical results on the basis of a structural VAR suggest that in the CECs the exchange rate appears to have served as much or more as an unhelpful propagator of monetary and financial shocks than as a useful absorber of real shocks.