Lithuanian financial institutions alarmed by Europe’s debt issues

VILNIUS - The Bank of Lithuania carried out a survey concerning the risks to Lithuania's financial system. The results show that the country's financial system is perceived as stable, while the greatest risk to the system is posed by the debt issues of the other European countries and possible contagion effect in the Lithuanian economy.

Financial institutions are also concerned about the price shock of energy resources and possibly slow Lithuania's economic recovery.

"Both issues in the eurozone and the price shock of energy resources may have a significant negative impact on Lithuania's economy. The importance of these external risk sources is fuelled by the fact that prevention measures in Lithuania are limited, therefore it is hardly possible to reduce the negative impact," said Director of Financial Stability Department in Economics and Financial Stability Business Area, Bank of Lithuania Gediminas Simkus.

Representatives of financial institutions also worry about the possible changes in the political environment in the country. A number of respondents fear that problems of economic policy continuity may occur as new political forces enter the power.