ECB’s Nowotny believes the current banking troubles in Eastern Europe are manageable, but that the banks must change their business models. The official said “it needs to be a banking model that is much more cautious and limits foreign currency lending. That would also mean that we don’t have growth rates of 30 to 40 percent anymore but means that we would have a more stable banking system in the long-term.”
Nowotny also called on the EU to increase the money available to new EU members saying “The macro economic assistance fund of 25 billion euros that has been used to stabilise Hungary together with the IMF, and also in the Baltic countries. Would it be sensible to increase this fund? This will show the outside world that there is a stronger element of stability.”