Banking in Cee Countries From the Perspective of the Evolving European Banking System

Abstract

Cross-border banking has become a defining feature of the economic transformation and development of Central, Eastern, and Southeastern Europe (CESEE). Using a comparative case-study design across four host countries (Czechia, Hungary, Croatia and Albania) and two home countries (Austria and Italy), this study examines how power relations between European authorities, home and host countries, and the national interest shaped adjustment within the evolving European banking system, especially through the European Bank Coordination (Vienna) Initiative. This public-private platform emerged during the global financial crisis. The findings are based on various documents that reveal that the Czech National Bank relied primarily on domestic macroprudential instruments and bilateral coordination with parent banks. Hungary initially used Initiative-based stabilization but subsequently adopted nationalist banking policies.In contrast, Croatia's active participation in the Initiative strengthened coordination between home and host supervisors in the Western Balkans. Albania's experience highlights the Initiative's stabilising role in regulatory dialogue and in supporting domestic reforms. From the home-country perspective, Austria played a central role in launching the Vienna Initiative, ensuring the maintenance of cross-border exposures and mitigating systemic risk. Italy represents a hybrid model, where regional engagement remains important but constrained by domestic intermediation and sovereign exposure. The findings also indicate that governors' leadership styles strongly shape national responses to the evolving EU financial governance.