Article

 

The impact of the crisis on foreign currency borrowing of households in CESEE - Implications for economic policy (p.37-47)

by

Elisabeth Beckmann, Oesterreichische Nationalbank

Helmut Stix, Oesterreichische Nationalbank

Keywords : Foreign currency loans, Behavior of households, Regulation, CEEC

JEL classification : D14, G21, G28

Abstract

The crisis highlighted the risks associated with foreign currency lending to households. Based on previous research and micro evidence from the Euro Survey of the Austrian Central Bank, this note shows that households in CESEE perceive foreign currency loans as riskier, but demand for these loans is remarkably stable. We argue that economic policy needs to distinguish between supply and demand driven foreign currency lending. If it is driven by demand factors, restrictive regulation might not be the remedy.