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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