Most of the Western European banks are now witnessing a drastic surge in non-performing loans as the Eastern Europe region slowly slips into recession, prompting concerns that the crisis may spill over if Western European counterparts had to bail out their east-exposed lenders.
IMF has appealed the Austrian, Swedish, Italian, German and French banks to assure Eastern Europe that they would carry on to provide capital to their economies and credit to their subsidiary banks – quoted guardian.co.uk.
Mr. Kahn has conceded that IMF had made a mistake in the Fund’s Global Financial Stability Report published in April 09, by overstating the short-term funding requirements of many Eastern European countries, but the corrected data did not alter IMF’s view of risks in the Eastern European region.
“Risks in Eastern Europe do exist but they are manageable and we are working to manage them. The problem is bigger and not smaller than in other emerging countries, and we have to take care of it, he added.
