<b>Beware! Bad banks in operation</b>

January 01, 1999

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Headline: Beware! Bad banks in operation Source: Euromoney Date: September 2000 more on Banking more on central & eastern Europe more from Euromoney September 2000 Bankers and their regulators converging on Prague for the IMF/World Bank meetings this month should be nervous about the vulnerability of the world financial system to attack – not by aliens, hackers or international terrorists but by the shortcomings of thousands of interdependent institutions. Highly correlated and linked financial markets mean contagion can spread in seconds. Short of rebuilding national barriers, like electronic iron curtains, there’s no way to isolate ourselves from contamination. The reforming countries of central and eastern Europe and the former Soviet Union are a weak link. They need more help and example from the west. Bringing in foreign strategic investors isn’t a panacea, as the following pages show. There are no bad banks, only bad supervisors. That is a broad-brush view. But without bad banks, central and eastern Europe would not have turned capitalist quite so fast. Now it's time for these Financial entities, prompted by their supervisors, to shape up or they could endanger more than themselves and their national economies.

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Banking