Matolcsy: Banks stepping stone for economic growth

History

If Hungary is to move toward long-term economic growth, banks, the private sector and the state must find a way to cooperate, National Bank of Hungary (MNB) Governor György Matolcsy told weekly Heti Válasz in an interview published today.

“The banking system could act as a stepping stone for the economy, while a partnership with the state and the private sector, could give momentum to modernization in Hungary,” Matolcsy told the paper.

During his tenure as Minister of National Economy between 2010 and 2013, Matolcsy was instrumental in introducing the bank levy in Hungary in 2010, according to reports. Matolcsy acknowledged, however, that the profitability of the banking sector was an issue that needed to be addressed, according to the paper.

“A 10-12% return on equity would be ideal, but we are far from this at the moment,” he told Heti Válasz, adding that this is the first time in years that banks will be profitable at a sector level. This was a motivating factor in the government’s decision to reduce the bank levy, according to Matolcsy, who said he would support even greater reductions if banks committed to increased lending, the paper reported.

“We must also restructure the thinking and the operation of the banking system,” he was quoted as saying. Matolcsy placed the blame for weak lending activities on bank’s lending policies and not on the sector’s liquidity, according to the paper.

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