Hungary’s central bank will take steps in the next few days with a view to restricting banks’ foreign currency lending in order to reduce the associated risks to the country’s financial system as well as to individual borrowers, Andras Simor, Governor of the National Bank of Hungary, told MTI by phone on Sunday.
Simor, speaking during a conference organised by the International Monetary Fund and World Bank in Istanbul, said that the bank would ask the Finance Ministry to give it extra powers in a bid to further stabilise Hungary’s wider economy and reduce the impact of any future financial crises.
Hungary, which averted financial meltdown after securing a 20 billion euro IMF-led rescue package last year, came to the brink due to its huge stock of foreign currency loans. Consumers were drawn to the banks’ FX loans because Hungarian interest rates were much higher than those in Switzerland and the euro area.