The good news is that the region’s banking sector is starting to find its feet. The bad news is that familiar vulnerabilities remain in those countries that were hit hardest during the global crisis, which leave the financial system vulnerable to an escalation in tensions within the euro-zone. Meanwhile, the big challenge for policymakers in Turkey will be to ensure that the country’s banks – which are amongst the strongest in the region – do not succumb to over-exuberance.
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