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International Monetary Fund. European Dept.

Abstract

This report analyses the main economic developments and achievements in the Western Balkan countries, and lays out the key macroeconomic policy challenges for the future.

International Monetary Fund. European Dept.
and
International Monetary Fund. Monetary and Capital Markets Department
The Slovenian financial system has been hard hit by the crisis. Banks remained highly vulnerable to continued credit deterioration and refinancing risks. Strengthening of financial condition of banks should be the short-term priority. The financial restructuring should be followed by privatization of state-controlled banks. The supervision of financial institutions should be complemented with a macroprudential overview geared toward overall stability of the financial system. The crisis preparedness and management framework should be improved, and risks to systemic financial stability should be identified.
International Monetary Fund. Research Dept.
This paper examines determinants and leading indicators of banking crises. The paper examines episodes of banking system distress and crisis in a large sample of countries to identify which macroeconomic and financial variables can be useful leading indicators. The best warning signs of the recent Asian crises were proxies for the vulnerability of the banking and corporate sector. Full-blown banking crises are shown to be associated more with external developments, and domestic variables are the main leading indicators of severe but contained banking distress.
International Monetary Fund. Research Dept.
This paper focuses on the relation of inflation to economic development. Due to the inadequacy of savings and the difficulty of directing them into productive investment, there is a strong temptation to raise the level of investment by expanding bank credit—that is, by inflation. In most low-income countries, even the most forceful measures for increasing savings and for applying them to the most urgent needs would still leave the economy with inadequate resources for the investment necessary to assure tolerable progress in raising productive efficiency and expanding production. The only way of securing adequate resources for development in such countries is by supplementing domestic savings with capital from abroad. It is characteristic of the underdeveloped countries that the resources they put into investment are generally a smaller proportion of their very much smaller national product than is true for the more highly developed countries. The proportionally low level of investment in underdeveloped countries may be due to various factors. Frequently, though not universally, the cause of inadequate investment is the unavailability of savings.