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The ECB’s close cooperation on supervising banks in Bulgaria and Croatia

Abstract The close cooperation arrangement for Bulgaria and Croatia poses challenges for the ECB that we discuss in terms of existing and emerging risks and vulnerabilities in the two banking sectors. The focus is...

Designing exit strategy requires judgment, coordination among different institutions, and graduality. Restoring banks’ balance sheet transparency is a first-order objective. To this end, borrower
relief measures should be phased out ahead of the other measures. Relaxation of loan classification and provisioning policies can be lifted in a second stage. The last one to be unwounded would be
capital relief initiatives. To provide banks time and space of manoeuvre, exit strategies needs to be communicated in a clear and timely manner.
This paper was prepared by the Economic Governance Support Unit (EGOV) at the request of the Committee on Economic and Monetary Affairs (ECON).

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