The Role of Macro-Prudential Policies in the Boom and Adjustment Phase of the Credit Cycle in Estonia
The Estonian economy experienced an unusually long business and credit cycle during the first decade of the 21st century. The magnitude of the cycle tested what can be achieved by traditional policy tools and the limits of macro-prudential policies...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111005144403 http://hdl.handle.net/10986/3599 |
| Summary: | The Estonian economy experienced an
unusually long business and credit cycle during the first
decade of the 21st century. The magnitude of the cycle
tested what can be achieved by traditional policy tools and
the limits of macro-prudential policies. The country's
financial sector, almost fully consisting of foreign banks,
displayed the complexities of cross-border regulation and
supervision. Capital and liquidity requirements that were
stricter than international minimums, as well as the
build-up of fiscal buffers, were instrumental to engineering
an orderly adjustment. Openness and integration, including
well-advanced cross-border cooperation, were equally
important in maintaining financial stability throughout the
global financial crisis. |
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