Full Forum 2021
Vienna Initiative Full Forum 2021
Annual Full Forum Meeting of the Vienna Initiative, Split, 28-29 October 2020
European Bank Coordination Initiative discusses economic impact of Covid-19 pandemic
The European Bank Coordination (Vienna) Initiative has warned against potential economic disturbances as the global economy struggles to recover from the Covid-19 pandemic. Opening the first Full Forum meeting of the group since the outbreak of the crisis, Governor of the National Bank of Croatia (HNB) Boris Vujčić cautioned against “a resurgence of inflation, the persistence of which across different economies is uncertain, but which may affect the anchoring of inflation expectations”.
The HNB governor paid tribute to the central bank participants of the Vienna Initiative for their response to the initial outbreak of the pandemic and the first lockdowns in early 2020 and for successfully delivering on their mandates, if “in a sometimes unorthodox manner”. He observed, however, that “the full impact of pandemic effects on private-sector resilience and the quality of firms’ balance sheets may yet emerge into full view in the period to come, with a direct impact on lending activity and the need for resolute, forward-looking action”. Any such action, however, the participants agreed, would have to be carefully assessed and take into consideration both timing and boundaries. While some central banks in the Vienna Initiative region have started to raise interest rates in response to rising inflation, the Forum also recognises the need to support still fragile economies on the road to recovery, especially as there are other reasons for concern, such as supply-chain disruptions, rising commodity prices and labour-market shortages.
The Full Forum took place on 28 and 29 October in Split, Croatia, hosted by the HNB. It brought together representatives of the International Monetary Fund, European Commission, European Bank for Reconstruction and Development, European Investment Bank, World Bank Group, European Central Bank/Single Supervisory Mechanism (ECB/SSM), home- and host-country central banks and authorities, major cross-border banking groups and other financial-sector stakeholders.
The European Bank Coordination (Vienna) Initiative is a framework for safeguarding the financial stability of emerging Europe. It was launched at the height of the first wave of the global financial crisis in January 2009, bringing together public- and private-sector stakeholders of EU-based cross-border banks active in emerging Europe.
Against the backdrop of the COP26 climate conference, the Forum looked at green finance, institutional investor perspectives on the configuration of financial instruments and issues related to environmental and social governance (ESG). Governor Vujčić underlined: “These considerations have begun to shape central bank decision-making in a variety, but also a multiplicity, of ways and we cannot overlook the implications of social and governance dimensions of ESG evaluation and implementation efforts for all of us.”
In this context, the Forum endorsed the establishment of a new working group on climate change and financial stability. The group will seek to improve cross-border cooperation on identifying and assessing climate change-related risks to the financial sector, coordinating policies to contain them and reinforce financial stability, and reducing the costs of protecting financial systems.