VILNIUS — The Scandinavians brought the money and the Baltic states brought their untapped markets.
Together they created the “Baltic Tiger,” one of the fastest-growing economies in the world for much of the past decade. But the combination of the popping of a vastly overheated real estate market the tiger engorged and the global credit crisis sent the Baltic states economies into some of the steepest declines seen worldwide and gave the banks massive losses.
To mitigate this chronic instability of these still-developing economies and to protect the banks from their own overzealous lending, representatives from the finance ministries of Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden signed an agreement in Helsinki on Tuesday to enact measures to ensure greater economic stability for the region. The stated aim is to reduce the risk of a financial crisis spreading cross-border, and to enhance possibilities to reach an efficient crisis management by public authorities via better communication and agreed solutions.
The Nordic-Baltic Cross-Border Stability Group, with a rotating chairmanship among the signing countries, is being created to implement the agreement and will first be headed by Denmark, whose Danske Bank is one of the Scandinavian banks still being burned by overexposure in the Baltic states.
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