Description:
The Czech Republic had experienced a
credit boom similar to those in other converging economies
in the pre-crisis years. Nevertheless, the consequences of
this credit boom were limited as was the impact of the
global crisis on domestic financial institutions. This paper
describes the developments in the Czech banking sector and
explains how the tough macroeconomic environment in the
Czech Republic acted as a strong tool of macroprudential
policy. It concludes that although it is difficult to tame
credit booms in small converging economies, a concerted set
of microprudential and macroprudential measures, including
monetary and fiscal ones, may ensure some success.