The steep fall in the value of eastern European currencies could create problems for local banks, especially those with high levels of foreign currency exposure, warned a Polish banker.
'If the zloty is at the current level over the next six to 12 months and we see an increase in unemployment, then we will see an increase in writeoffs,' said Krzysztof Rosinski, chief executive of Getin Holding, a local banking group that had been one of the most aggressive foreign currency lenders during the recently ended real estate boom.
The problem is a large and growing one in Poland, where 70% of all mortgages are denominated in foreign currency, mostly Swiss francs. The zloty has fallen 40% against the franc since peaking last summer, with a particularly sharp fall last week.
European leaders called for doubling the International Monetary Fund's war chest to $500 billion for bailing out financially stricken nations, amid new signs that Europe's former Communist east is sliding into a full-blown crisis.
Financial Times, Wall Street Journal