The financial crisis and the EBRD

Markets - financial crisis

The EBRD has played a critical role in helping its countries of operation respond to and plan for a sustained recovery from the financial crisis.

In the aftermath of the global crisis of 2008-09, the EBRD worked hard to maintain the flow of finance to its regions, head off a withdrawal of cross-border banking groups and support projects critical for the long-term.

The EBRD actively cooperated with other International Financial Institutions (IFIs) in investing and policy dialogue to support the region.

Amidst the credit crunch of 2009, its immediate response was to boost its level of investments by more than 50% and to sustain record levels of investment over the subsequent years.

Taking equity stakes in troubled banks, financing SMEs through foreign bank subsidiaries and expanding its lending in local currencies have all been part of the EBRD’s successful efforts to support the regions' economies.

A Joint Action Plan, also agreed in 2009, by the EBRD, the World Bank Group and the European Investment Bank eventually delivered more than €33 billion in funding for eastern European banks to onlend to businesses.

It was succeeded by other initiatives such as the November 2012 ‘Joint IFI Action Plan for Growth Central and South Eastern Europe’.

A highly visible part of the EBRD’s response has been the Vienna Initiative, a network and virtual think-tank for safeguarding the financial stability of emerging Europe.

The Vienna Initiative originally worked to prevent a large-scale withdrawal of cross-border banking groups.

It has subsequently evolved to help countries manage deleveraging from the region and address high levels of non-performing loans.

To advance further along the path of income convergence, the EBRD regions will have to push through tough fiscal and structural reforms, develop local capital markets, better husband its energy resources and diversify away from dependence on commodities.

The EBRD is well placed to help them meet those challenges.