Bad debt in eastern Europe, already exceeding a third of all lending in several countries, will stay at high levels and cast a pall over hopes of restoring credit growth, according to the region’s leading bankers.
A revival of the Vienna Initiative is needed because there must be a recognition that “there is still a coordination failure” between eastern and western Europe to tackle banking risks, said Piroska Nagy, director of country strategy and policy at the European Bank for Reconstruction and Development.
Europe’s new risk watchdog may push eastern nations to tighten rules on foreign-currency loans that threaten economic stability throughout the region after making the issue one of its top priorities, banking officials said.
International Monetary Fund chief Dominique Strauss-Kahn awaits his first court appearance on attempted rape charges after giving police permission to examine him for physical evidence of scratches and DNA from his accuser.
Eastern Europe may require funds from the International Monetary Fund and other international lenders to pre-empt a banking crisis and a shortage of credit in the region’s economies as western banks pare assets.