Hello Rafi,

Re-read the article carefully and you will see that these mortgages are denominated, not just in euro, but also Swiss francs. In fact, it is widely believed that well more than half are denominated in Swiss francs. Unfortunately, penetrating data that would allow greater insight do not exist.

Separately, if the Europeans solve their debt crisis it is likely that the Euro would strongly appreciate sending the EU periphery mortgagees into a difficult situation. In other words, solving the crisis will likely result in economic headwinds in the form of mortgage default risk. Normally this would not be a large problem, but in the context of the EU on the brink of recession already, it may serve as a catalyst for a recession.

With smiles!

Jason A. Voss, CFA