The Swiss Franc and a Possible Central European Crisis

As the Swiss franc strengthens in comparison to the euro, concerns are being raised about the large number of franc-denominated loans, particularly mortgages, in Central Europe. As the franc's value rises in comparison to Central European currencies, it proportionally increases the debt repayment values of these mortgages, risking massive defaults in these countries, particularly Poland and Hungary. While mortgages are traditionally robust forms of debt and governments, including that of Switzerland, are attempting to mitigate the risk to mortgage owners, a major economic event in the eurozone could cause massive defaults in Swiss franc-denominated mortgages, leading to contagion across the Continent, particularly in Austria.