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2015.12.02 10:29

Geopolitical tensions seen as biggest threat to Lithuania‘s financial system

DELFI.lt 2015.12.02 10:29

The key risks to Lithuania‘s financial system come from geopolitical tensions in Eastern Europe and a prolonged low interest rate period, according to a survey by the Bank of Lithuania.

The key risks to Lithuania‘s financial system come from geopolitical tensions in Eastern Europe and a prolonged low interest rate period, according to a survey by the Bank of Lithuania.

Simonas Krėpšta, the Director of Financial Stability Department of the Bank of Lithuania, said that “the conflict between Russia and Ukraine has been perceived as the biggest threat to our country’s financial system for more than a year. However, with the tensions in the East subsiding, the financial institutions have identified other incidents that can affect the financial system negatively, for example, the exacerbation of the refugee crisis in Europe and a slowdown of China’s economic growth.”

The exacerbation of the refugee crisis in Europe was identified as the event most likely to negatively affect the country’s financial system in the coming year, but the effect would probably be indirect.

Risks connected to loans and the real estate bubble were identified as least dangerous to the financial system.

The survey is carried out twice a year. Banks and credit companies, management companies and other financial institutions evaluate the most important risks to the Lithuanian finance system, the probability of adverse events and their negative effects in the nearest six months.