In Europe’s tight quarters, borrowing from your neighbor across the border could lead you down a bumpy road.

• Central European households and small businesses are struggling under the weight of foreign-currency debts.
• The fluctuation in interest rates and currency values associated with foreign-currency lending has put many into debt, resulting in stalled economies as people try to pay off loans.
• Governments are scrambling to implement preventative regulations, including legislation to ban foreign-currency mortgage loans and a government buyout fund that would allow borrowers to convert their foreign loans to their native currency.

Facts & Figures

• In Hungary, nearly 70% of the country’s total household debt was borrowed in foreign currency.
• In the Baltic states 70-90% of household borrowing is in foreign currency.

Best Quote

“Hungary is close to its non-performing loan peak.” – Sandor Csanyi, Chief Executive, OTP

Tags: buyout, debt, economy, foreign-currency loan, interest rate, legislation, loan