According to Nagy, the current SME lending stock of banks operating in Hungary is around HUF 3.5-3.6 trillion.
The deputy governor noted that MNB allotted HUF 618 bln of a new three-year IRS conditional on lending activity at the first tender of such swaps yesterday. Banks partaking in the tender are committed to raising their SME lending by HUF 154.4 bln in 2016 and in the next three years if they continue to use the facility.
Nagy also attributed a 10 basis point drop in yields for three- and five-year government bonds to the heavily oversubscribed IRS tender yesterday.
Combined with the FGS, the IRS tenders could expand bankʼs SME lending by approximately HUF 300 bln compared to the current level.
Nagy believes that in the future when looking at corporate lending, SME financing should receive more attention because big companies already have such a vast amount of stockpiled cash that they will be financing their investments from these funds.
The MNBʼs balance sheet could decrease from around HUF 4 tln to HUF 3 tln by the end of March due to several factors and by April the MNB will phase out its two-week deposit facility, reducing liquidity for the banking sector, said Nagy.
“We will not touch the base rate, I rule out cutting rates in the current situation. In the future the role of non-conventional tools will expand for monetary policy, for example the central bank will also pay attention to fine tuning the interest rate corridor,” he said.
It is favorable for the central bank if the base rate is around the center or the lower segment of the interest rate corridor, Nagy added.
Talking about the governmentʼs expansion of the home subsidy system for families with one or more children purchasing homes, the deputy governor said that experts at the MNB are estimating that building 5,000 new homes a year could lift GDP by 0.4%.
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