Insight: Eastern European chill in currency markets

By Gillian Tett

Published: September 27 2007 17:38

A few months ago, Sveriges Riksbank – Sweden's central bank – issued a thought-provoking note on financial stability.

This pointed out that financial conditions in the Baltic region were becoming increasingly vulnerable to a market shock and noted that if this jolt did occur, one victim could be the Scandinavian banks.

Indeed, the Riksbank was apparently so uneasy that it named and shamed two of the most vulnerable banks (Swedbank and SEB), an unusual move in central banking terms, as Absolute Strategy Research, a think-tank, observes.