The MNB launched this concept with the aim of drawing banksʼ excess liquidity out of the central bank and into forint government securities. To support the concept, it replaced its main sterilization instrument, two-week bills, with two-week deposits that are not accessible to foreign investors and cannot be traded, making them an unattractive instrument for managing liquidity.
Between early 2014 and March 2015, the ratio of FX debt in Hungaryʼs gross state debt fell from over 40% to under 34%, the MNB said. At the same time, banks’ share of state debt rose from 15% to almost 19%, and the average maturity of these holdings climbed from 2.8 to 3.6 years, thereby reducing the risk of refinancing the debt, it added.
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