Parliament on Monday voted for a government guarantee to boost bank equity and cover debts.
The new law was adopted in a vote of 377 in favour with one abstention. No one was opposed. The law is intended to boost the stability of the banking sector, with 600 billion forints (about 22.5 billion euros) borrowed from the International Monetary Fund which will be made available to commercial banks through the National Bank of Hungary (NBH).
The banks will have to request or at least agree to receiving the guarantees, but under some circumstances the central bank can raise their equity without their agreement.
NBH and the financial regulator have repeatedly said that the banks are sound but might need to refinance debt, given the global credit crunch.