Friday, May 07, 2010

Eastern Europe keeps lending in euro's

The New York Times has an article about how East Europeans keep lending in euro's instead of the local currencies. The article focusses on Hungary and Romania, but I suppose it applies to other countries too.

Some highlights:
- In Hungary, foreign-currency loans slipped to 63 percent of all loans at the end of 2009
- After the currencies sank last year defaults rose, but only a bit. For example, nonperforming loans at Erste Bank grew to 8.5 percent in Eastern Europe. By comparison, bad loans in Erste Bank’s home country, Austria were 6.3 percent.
- Economists consider it dangerous for governments now to stop those loans. I beg to disagree.

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