MNB: Banking sector liquidity grows in February

Central bank foreign assets were raised by anpreviously decided IMF quota increase that took effect on February 2. The increase did not affect the level of international reserves which rose between the end of January and February mainly due to transfers arriving from the European Union.

Average monthly stock of the three-month central bank deposit, introduced as the main sterilization instrument in the autumn of 2015, rose HUF 41.2 billion to HUF 3.057 trillion. At the same time, stock of the two-week deposit instrument, which the MNB plans to phase out by April, fell by HUF 55.8 bln to HUF 895.7 bln.

The rise in the average stock of banksʼ overnight deposits, by HUF 38.8 bln to HUF 147 bln, more than offset the combined drop of the three-month and the two-week deposits.

The average stock of money in circulation fell HUF 28 bln to HUF 4.282 tln.

The stock of central government deposits averaged HUF 1.221 tln, up HUF 82.2 bln, after dropping more than HUF 780 bln in December and January. The rise mainly reflected FX deposit placements by the Government Debt Management Agency (ÁKK), the MNB said.

Central government deposits fell HUF 144.1 bln, due to transactions, to HUF 1.352 tln at the end of February. The drop came after a HUF 836 bln rise in January that offset the bigger part of a more than HUF 1.40 tln plunge from the end of November to the end December.

Central government deposits usually fall around the end of the year as the government debt manager tends to reduce these in a bid to keep gross state debt on a declining trend, as required by both EU rules and Hungaryʼs Constitution.

Average foreign assets, including the central bankʼs international reserves, rose HUF 218.1 bln to HUF 10.331 tln in February. The rise reflected a SDR 901.6 million (HUF 354 bln) increase in Hungaryʼs IMF quota to SDR 1.94 mln on February 2. In line with IMF rules, 25% of the quota increase was met in SDR or in IMF reserve currencies, affecting the composition, though not the level, of foreign exchange reserves. The remaining 75%, paid in forints, raised foreign assets but is not part of the international reserves.  

Foreign assets stood at HUF 10.464 tln at the end of February, up HUF 343.6 bln in a month. About HUF 300 bln of the increase was due to transactions, primarily transfers from the EU, the bank said.

Foreign liabilities of the MNB rose on average HUF 293.6 bln to HUF 819.2 bln and were up HUF 290.7 bln in an end-of-month comparison in February, mainly in connection with the IMF quota increase.

The monthly average of the banking sectorʼs current account balances with the MNB exceeded reserve requirements by a slight HUF 2.1 bln compared to the total reserve requirement of HUF 360.6 bln.