What is puzzling is that when we focus solely on convergence in terms of GDP, we find evidence that such convergence is happening. For example, over the past decade Lithuania's GDP per capita rose to 87% of the EU average. The other two Baltic States also boasted robust convergence rates in terms of GDP convergence.
As local debt markets are at an infancy stage in many countries in the region, this would make it difficult for potential D-SIBs to hold high-quality liquid debt instruments as “pre-emptive” liquidity buffers against early signs of stress. Hence, there is a need to find an appropriate way to deal with this issue, until debt markets in the region witness significant improvements.