Financial Markets: Emerging Capital Markets in Central Europe

BANKS AND CAPITAL markets are to mature market economies what central planning offices were to command economies. By allocating resources to certain projects and sectors – and denying them to others – they organize the economy. In Hungary, the Czech Republic, and Poland – which are comparable, fast-track reformers – creating capital markets has been a key facet of the transition to a market economy. Because a liquid capital market is the most transparent allocator and mobilizer of an economy’s resources, it is a useful indicator of economic reform.