Penal measures are being threatened by Europe’s top regulator as it tries to crack down on foreign currency-denominated mortgages, which have caused serious problems in eastern Europe and even raised fears about the stability of the banking system in some countries.

Charlie McCreevy, the European Union’s internal market commissioner, told a conference on responsible lending in Brussels on Thursday that the difficulties that had arisen after domestic customers were lured into taking out mortgages denominated in other currencies were “a big concern”.