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Western European banks, which dominate the east European banking industry, must work with European and local regulators to limit the risks of a credit squeeze as they cut assets to meet tighter capital rules, the Vienna Initiative group said.
The group of global lenders, regulators and policy makers, which helped keep eastern Europe’s banking industry afloat in the aftermath of Lehman Brothers Holdings Inc. (LEHMQ)’s bankruptcy, met the region’s largest banks today in Brussels to discuss the fallout from the euro region’s debt crisis.
“Principles to avoid disorderly deleveraging in emerging Europe were agreed by officials and private sector banks,” the group said in a statement distributed by the European Bank for Reconstruction and Development today. “Banking groups active in the region and national as well as European authorities should cooperate closely in efforts to maintain credit conditions consistent with sustainable economic growth, according to the proposals.”
The European institutions should play a central role in supervisory coordination and international financial institutions, such as the EBRD and the International Monetary Fund, should support the implementation of the agreed principles, the statement said.
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