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World Bank warns of debt risks

Banks and companies in some Central European countries, including Hungary, have borrowed large amounts in foreign currencies, which could pose a threat to their financial stability, the World Bank warned in a new report.

While Latin American corporations were the biggest borrowers between 1997 and 2001, firms from emerging Europe and Central Asia are now in the lead, with debts totaling $135 billion in 2006, the report said, adding that banks in Eastern Europe, particularly in Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Russia and Ukraine, are increasing their foreign exchange exposure to levels that could jeopardize financial stability. "Some of these banks have increased their foreign exchange exposure to worrisome levels, a concern that warrants special attention from national policy-makers," the World Bank said. (Gazdasági Rádió)