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LONDON, Dec 9 (Reuters) - Economic problems in Latvia and Hungary could spill over into the Czech economy via increased risk aversion among investors, Czech central bank Governor Zdenek Tuma said on Tuesday.
"There is a problem in Latvia, also Hungary is in trouble, Tuma told a conference in London. "Hopefully governments and central banks will be able to handle the situation. From the point of view of risk aversion, it hits that in general."
Hungary and Latvia have sought financial aid from the International Monetary Fund.
Foreign direct investment in the Czech Republic could be hit as an indirect consequence. "Risk aversion can have an impact on FDI inflows," Tuma added.
However, he said few Czech consumers took out foreign currency loans, unlike in countries such as Hungary, while credit growth was not as high as in nations such as the Baltic states. "Household leverage remains relatively low," he said. "This crisis was a trigger for any slowdown in credit growth. It's slowing down to more reasonable levels."
Tuma noted that some Czech businesses had called for euro membership, but he said being outside the euro zone allowed a more flexible framework.
"The euro is not a panacea," he said. "If other economic policies are not disciplined this (problems that arise as a result) cannot be solved by being in the euro."
The Czech Republic -- which has benefited from a strong currency and low interest rates -- does not have any euro entry target date, with the government and central bank stressing the economy should first be aligned with the euro zone.
Companies, however, are lobbying for fast euro adoption to protect their margins squeezed by the long-term crown currency firming. The government has said it may set an entry date next year.