Credit Policy and the Management of the Banking System in the EU Countries during the Financial Crisis

The sharp deceleration of credit growth to the private sector in the EU, after half a decade of exuberance, will inevitably squeeze households and enterprises and can only aggravate the worsening recession. The region experienced very rapid credit growth in recent years, which was generally viewed positively as supporting rapid convergence to the but at the same time it contributed to the emergence of sizable macroeconomic and financial vulnerabilities. European Governments should use monetary and fiscal policy and not only in order to stimulate domestic non-governmental credit growth because it is crucial for the recovery of the European economies. Within emerging markets, eastern European economies have been the hardest hit. The linkages between western Europe and emerging European banking systems make the region particularly vulnerable. The paper tries to present some financial policy measures regarding banking sector for stimulating credit growth in the Europe and especially, in the Central and Eastern European Countries.