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Central Bank To Defend The Hungarian Financial System Against “Attacks”

Tamás Székely 2014.12.10.

Besides preserving price and financial stability, the main job of the National Bank of Hungary (MNB) in 2015 will be to defend the Hungarian financial system against any attacks, the bank’s chief, György Matolcsy, said. Matolcsy told parliament’s economic committee that in 2015 it could be expected that a third recession “crisis” in the European Union would make circumstances for Hungary more difficult.

He also said that cooperation between the central bank and the government had been successful, highlighting activities to solve the problem of foreign-currency loans and the conversion of these into forint ones. Matolcsy said the MNB’s international reserves were high — and would remain high — allowing it to carry out its legal mandate and meet challenges. While the EU followed a wrong, tightening economic policy, Hungary proved that it was possible to carry out a turnabout in budget matters, investment, consumption and growth atthe same time, the MNB governor, who was economy minister from the summer of 2010 until the spring of 2013, said.

The Juncker investment programme announced by the European Commission is good, but came late, and is small, he said. The 314 billion euro total should be raised to 600-700 billion, Matolcsy said. The monetary policy turnaround, which started in the spring of 2013, is over by the end of 2014, Matolcsy said, noting that at present every fifth SME loan is linked to the bank’s Funding for Growth Scheme, in which banks provide SMEs with capped-rate loans on the back of central bank refinancing of zero percent interest, launched in the summer of 2013.

The central bank governor called the conversion of retail FX loans into forint and the settling of the problem of FX loans a success, noting the active role of the MNB in the process. The MNB has successfully integrated consumer protection in 2014, and is no more making a loss, he said. It is worth operating the Funding for Growth Scheme until it is viable and the economic growth rate steadily rises into the 3-4% range, he said in response to MPs’ questions.

via photo: Lajos Soós – MTI