Situation in the banking system and on financial markets in Russia and selected countries in transition

Russia's financial crisis has dominated recent events on the financial markets in the region. The problems in Russia have affected other countries in transition both directly, through declining trading activity and banking sector exposure to the Russian market, and indirectly as international investor sentiment turned against emerging markets. As a result, the impact of Russia's financial problems on other countries in transmission not only depends on direct exposure to the Russian market, but also progress made in macroeconomic stabilisation and the associated structural and regulatory reforms that make stabilisation sustainable.