BUDAPEST (Reuters) - Strong lending in foreign currencies in the past years has led to problems in central and eastern Europe but countries are on the way to achieve a long-term stability in this area, European Central Bank governing council member Ewald Nowotny said on Monday.
“Many central banks of the region, including Austria, had been warning against this. This is something that now we have to adjust to a situation that is viable in long run,” Nowotny told a central banking conference in Budapest. “We are under way in this way but one has to be quite clear that, overall, this strong role of foreign banks had been a win-win for both sides.”
Nowotny said economic convergence process has restarted in the region, but the global economic crisis may have impacted potential growth rates and the process may be slow.
Reporting by Jan Lopatka; Editing by Gergely Szakacs