FX Street - Exposure to the crisis in Central and Eastern Europe
• Euro area banks’ losses on loans in Central and Eastern Europe (CEE) will be substantial due to an unfortunate mix of collapsing property prices, economic downturn and exchange rate depreciation. • Austria is by far the most exposed country, but the government can afford to absorb the losses. Belgium, which is a high debt country with a fiscal budget that’s already stretched, is in for smaller losses, but they also have less room for manoeuvre. • We look at three risk scenarios. A mild
