Challenges of the EU Financial System and Vulnerabilities of Central and Eastern European Economies

Triggered by the failure of Lehman Brothers in fall, 2008, a global financial crisis attacked the European countries. In this thesis, we argue about challenges of the EU financial system exposed by this financial crisis and problems of conventional growth strategy for the Central and Eastern European countries. Though the authority to supervise financial institutions and to carry out a fiscal policy are entrusted to each country in the EU, a financial policy such as liquidity provision and adjusting interest rates is enforced unitarily by the ECB. As a result, when financial institutions doing business for borderless in the EU faced a crisis, various problems occur when they practice prompt crisis countermeasures. That causes one of factors letting the EU financial system non-stabilize. Moreover, uneasiness of the financial system in the EU developed countries gives big influence to economies of the Central and Eastern European counties.