The European Bank Coordination Initiative, usually referred to as the ‘Vienna Initiative’, is a framework for safeguarding the financial stability of emerging Europe, first launched in the Austrian capital in January 2009.
Its record in crisis management and crisis resolution has proved so effective that what was originally an ad-hoc body set up as an emergency measure now has a permanent role to play in addressing dangers faced by the region’s financial sector.
The Vienna Institute now functions as a network and virtual think-tank uniting those concerned with the fate of the sector and with the ability to influence it.
At its creation the Vienna Initiative aimed to prevent the real and urgent threat of a large-scale and uncoordinated withdrawal of cross-border banking groups, in effect ‘a run’ on the whole region.
It also worked to ensure that parent bank groups committed to maintain their exposure and recapitalise their subsidiaries as part of the overall balance of payments support to countries helped by IMF/EC macroeconomic support programmes (ie Bosnia and Herzegovina, Hungary, Latvia, Romania and Serbia).
The Vienna Initiative also tried to ensure that national support packages for cross-border banks benefited their subsidiaries in emerging Europe and avoided bias towards ‘home’ by their parents.
Its success in coordinating the actions of IFIs, governments, regulators and banks has since ensured a continued role for it in the region’s response to the Eurozone crisis, in particular in managing deleveraging from eastern Europe. The new focus has also prompted a new name for the body: Vienna 2.0.
The EBRD was one of the main founders of the the Vienna Initiative, which brings together public and private sector stakeholders from EU-based cross-border bank groups in the region, among them:
- International financial institutions (the International Monetary Fund, the EBRD, European Investment Bank and the World Bank)
- European institutions (the European Commission and the European Central Bank as observer)
- Home and host country regulatory and fiscal authorities of large cross-border bank groups
- The largest banking groups operating in the EBRD region.
The Chairman of the Vienna Initiative’s Steering Committee is currently Marek Belka, Governor of the National Bank of Poland.