The Vienna Initiative
The Vienna Initiative was a plan undertaken in January 2009 by European banks and governments during the height of the financial crisis to control the situation and work towards a joint solution specifically in developing regions of Europe. At the height of the crisis, several international financial institutions, European agencies and governments, and the largest European banks of the EBRD banded together with a list of goals and targets to accomplish. The initiative sought to prevent large scale withdrawals from developing regions and countries, ensure that large banks commit to maintaining exposure to subsidiaries and recapitalize them , avoid home bias in aid, agree on crisis management and resolution, and strengthen cross-border regulatory cooperation. At the height of the crisis, many were afraid of a 'Prisoner's Dilemma' occurring in which larger foreign banks would pull support and investment from developing subsidiaries and thus cause financial ruin. Although it would have been beneficial for one bank to do so if the other's had not, the Vienna Initiative succeeded in instilling cooperation to avoid this. Large European banks remained committed to their support and allowed for gradual deleveraging of the entire system and manage liquidity more efficiently . The Vienna Initiative was seen as a success by its leaders, since it mitigated the crisis and minimized financial distress in the target regions. The initiative was a significant mark in European banking cooperation and convergence. The success here will undoubtedly lead to further cooperation and aim towards a goal of a European macroeconomic policy to avoid any such credit risks in the future.