Need for stronger Chinese walls
The Czech Republic built a reputation as an oasis of regional economic and political stability in the first seven years after the collapse of communism in eastern Europe. But, after what one foreign banker described as its annus horribilis, during which the country was battered by floods, a currency crisis, economic austerity measures, rising unemployment and a government collapse due to a political funding scandal, the Czech Republic faces a painful new year as it tries to bring the reform process back on track.
There was some respite for the country with the appointment of the Czech National Bank (central bank) governor Josef Tosovsky as an interim prime minister. But he has to win a vote of confidence this month if his government is to survive for a limited period before elections can take place.
The key test for international bankers will be if ministers press ahead with the sale to foreign financial institutions of major stakes in the three largest state banks, ensure that there is a properly functioning capital market by enforcing new stock exchange and investment banking legislation and take further steps to diversify an economy that is still dominated by low wage, low technology industries.