While much of the financial and banking sector is in turmoil following the bankruptcy of US giant Lehman Brothers and the purchase of Merrill Lynch, banks and lending institutions in Eastern Europe seem to be performing better so far and are continuing to provide their clients with significant loans and mortgages.

The most common characteristic of just about all banks in every East/Central European country is that they offer private citizens and small businesses loans in foreign currency.

In the vast majority of cases, this means that Hungarians, Slovaks and Czechs usually borrow money in either euros or Swiss francs, rather than in their native forints of korunas. 

Eastern Europeans would then use these loans to purchase new cars, flats or—in the case of young professionals—their first homes.

Yet taking up a loan in foreign currency for any of these purchases served as a huge gamble for Eastern Europeans, but one which ended up paying off in the end.

Since Poles continue to receive their salary in zloty, Hungarians get paid in forints and Slovaks and Czechs both receive pay cheques in their respective korunas, the danger was that these national currencies would tumble in value against the euro or Swiss franc.

But precisely the opposite ended up happening. The foreign currency loans that Eastern Europeans took up in 2004 were against far weaker national currencies.

The Hungarian forint, the Slovak koruna and the Polish zloty have all increased in value against the euro over the course of the current year, and this means that those who took loans are actually finding it easier to make their payments.

In the long-run, this is good news for banks and lending institutions as well.

At a time when foreclosures are becoming increasingly common in the US and parts of Western Europe, those on the eastern half of the continent seem to be in a better position not to default on their loans.