Between 2004 and 2008 low-interest foreign currency based loans, and above all household loans, became more and more popular in Central European countries like Croatia, Hungary, Poland, Romania and the Baltic countries in an environment of high and volatile inflation but stabilising and in some...

In this paper we develop a new Early Warning System (EWS) of Banking Crises based on a new estimated indicator of the gap between the observed private credit ratio and its long-term structural level.