European Central Bank Privately Worries Baltics Are The Next Debt Crisis

European Central Bank Privately Worries Baltics Are The Next Debt Crisis

Bloomberg: “the authorities in the Baltic states may not be able to prevent a renewed emergence of macro-economic imbalances and a repetition of the boom-bust cycle,” the ECB said in a document dated Nov. 17 and prepared for a meeting of the EU’s economic and finance committee.
Translated=The government can not the default.

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“The experience of the Baltic states suggests that, for countries that have opted for pegging tightly their exchange rates, there is a significant risk that relatively low interest rates lead to excessive domestic borrowing and the emergence of asset price bubbles,” the ECB said.
Translated=Defense of currency is stupid and will blow up your country.
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The boom-to-bust fate of the Baltic states has been exacerbated by euro-denominated borrowing since the countries joined the EU more than five years ago. That’s obliged central banks to stick more rigorously to their euro pegs or risk leaving households and businesses unable to service their debt.
Translated=Borrowing in something other then your own currency will lead to pain for everyone.