The European Bank Coordination “Vienna” Initiative is a framework for safeguarding the financial stability of emerging Europe.
The Initiative was launched at the height of the first wave of the global financial crisis in January 2009. It brought together all the relevant public and private sector stakeholders of EU-based cross-border banks active in emerging Europe, which own much of the banking sectors in that region and hold a significant proportion of government securities.
The Initiative has provided a forum for decision making and coordination that helped prevent a systemic banking crisis in the region and ensured that credit kept flowing to the real economies during the crisis. It specifically sought to limit the negative fallout from nation-based uncoordinated policy responses to the global crisis and to avoid a massive and sudden deleveraging by cross-border bank groups in emerging Europe.
The EBRD is one of the main founders of the Vienna Initiative, which brings together public and private sector stakeholders from EU-based cross-border bank groups in the region. Participants include other International Financial Institutions, European Institutions, home and host country regulatory and fiscal authorities and the largest banking groups in the EBRD region.
Following the widely-acknowledged success of the “Vienna 1.0” initiative in ensuring orderly deleveraging of Eurozone-based banks from Central, Eastern and South-East Europe (CESEE) between 2009 and 2011, there was a zest to preserve this public-private platform to continue coordination and regular exchange of views and to quickly react if a new crisis erupts.
As the new wave of the Eurozone crisis unfolded towards the end of 2011, signs of a severe credit crunch within the Eurozone and rapid deleveraging in emerging Europe surfaced. Furthermore, serious gaps in regulatory coordination between home and host countries’ authorities once again became apparent.
Consequently, “Vienna Initiative 2.0” was formed, with the aim to:
Facilitate home-host country authority coordination and reducing regulatory volatility and risk.
Help avert systemic stress through closely monitoring and reporting on cross-border funding withdrawal of Eurozone-based parent banks in CESEE.
Enable a quick coordination between relevant stakeholders in case of crisis.
More on the Vienna Initiative
Learn more about the Vienna Initiative at its dedicated website.