CEE roundtable: Central bankers fight to get banks through the downturn
The credit crunch has spread to emerging Europe – despite what the region’s central bank governors may claim. They have taken action to bolster liquidity and shore up the banking sector. Chloe Hayward asked 14 monetary authority heads what more they can do to manage the inevitable downturn.
The first signs of the crisis situation became evident in August 2007 when foreign investors started to withdraw their assets and commercial banks faced a liquidity deficit. In view of the limited access to external borrowing and the rise in its cost, in order to maintain the necessary level of liquidity Kazakhstan banks were forced to increase interest rates on the credits they extended and toughen lending conditions. This became the basic factor resulting in reduced access to credit.
So, between August and December 2007 the cost of credit increased by 5.6% and in the whole year by 54.7%.