Deleveraging and Foreign Currency Loan Conversion Programs in Europe

Comparative Economic Studies, 2020

26 Pages Posted: 1 Apr 2020

Date Written: March 1, 2020


This paper first reviews the developments in the size and composition of the European banking sectors’ balance sheets since the Global Financial Crisis, and then assesses the impact of foreign currency loan conversion programs on systemic risk. Aggregate data from 2009Q1 to 2019Q3 indicate three major developments. First, the deleveraging process in Europe has been sizeable, while credit growth may be hampered in several countries. Secondly, macroprudential measures and conversion programs have only partially achieved their goal of lowering financial dollarization in Central and Eastern Europe. Lastly, systemic risk remains elevated in the non-euro area.

Keywords: Deleveraging, foreign currency lending, financial dollarization, loan conversion programs, systemic risk

JEL Classification: F15, F21, F32, F36, G21

Suggested Citation

Vidaházy, Viktória and Yeşin, Pınar, Deleveraging and Foreign Currency Loan Conversion Programs in Europe (March 1, 2020). Comparative Economic Studies, 2020, Available at SSRN: or

Viktória Vidaházy

Swiss National Bank ( email )

Fraumuensterstr. 8
Zuerich, 8022

Pınar Yeşin (Contact Author)

Swiss National Bank ( email )

Boersenstrasse 15, P.O.Box
Zurich, CH-8022
41-58-631-3969 (Phone)


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