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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
The Ukrainian banking system has gone through persistent convulsions in the last seven years. A wave of West European purchases of Ukrainian banks just before the crisis of 2008–09 has been largely reversed. Instead, Russian and Ukrainian state banks have expanded, as have banks owned by people close to President Viktor Yanukovych. In 2006–08, Ukrainian [...]
The next euro country in possible need of an international stabilization program is not Italy but Slovenia. It is suffering from a moderate banking crisis. Newly appointed center-left Prime Minister Alena Bratusek argues that an international assistance program might not be necessary. She might be right, but only if the Slovenian government acts hard and [...]
Second in a series of postings on the European economic and budget situation. I am grateful to Natalia Aivazova for valuable research assistance. See also A Reassuring Choice for the Central Bank of Russia. Corporate profit taxes have fallen like stones throughout Western Europe in the last three decades. At the same time, their revenues [...]
Note: Natalia Aivazova has provided me with valuable research assistance, elaborating on all the statistics. In early 2009, the International Monetary Fund (IMF) and the European Bank of Reconstruction and Development (EBRD) raised a cry of despair. They feared that several of the 15 Western European banks that dominated the banking system of Central and [...]
Cyprus is small even by peripheral euro area standards. With a GDP in 2012 of less than €18 billion, the country is only about one-tenth the size of Ireland, Portugal, or Greece. In the context of the euro area’s new €500 billion European Stability Mechanism, its financial problems look like a rounding error. Yet as [...]
The euro area continues to struggle with its crisis. In the eastern part of the European Union, however, an illustrative contrast has arisen that tells us a lot about how to act and not to act in a financial crisis. The contrast between successful Estonia and Latvia on the one hand, and struggling Hungary and [...]
Belarus is heading to default. This country of 10 million people is running out of international currency reserves. Officially, they were down to $2.2 billion on October 1, which is a month’s worth of imports. But when reserves are so small the question always arises whether they are really usable. Meanwhile inflation surged and it [...]
What hand wringing there has been recently on both sides of the Atlantic as the major European economies pursue austerity in their budgets and social programs! But is it not overdone? Europeans and Americans need only look east—to the European Union’s new eastern members—to see that austerity can deliver growth and improve the efficiency of [...]
The International Monetary Fund (IMF) has had a good year in Eastern Europe. It has been called to help numerous countries and it has acted fast and generously. It has learned several lessons from the East Asia financial crisis of 1997–98, which was very similar. The East European crisis is primarily a current-account crisis, not [...]
For nearly a year, prominent American economists, such as Paul Krugman, Nouriel Roubini, and Kenneth Rogoff, have maintained that Latvia is just another Argentina (as Krugman has put it) and that it was only a matter of when, not whether, Latvia would be forced to devalue its currency. Well, despite these warnings, devaluation seems less [...]