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Rogán: Legal solution could be option for forex loan problem

MNB

A legal solution could be the best option for Hungarian borrowers with foreign currency-denominated loans, Fidesz parliamentary group leader Antal Rogán suggested in an interview published in business daily Napi Gazdaság today.

“Although everybody is thinking about a business solution, why couldn’t a legal solution be considered, one based on court decisions until now, among other things?” Rogán said, pointing to precedents in Croatia and Turkey.

Hungary’s government has given banks until November 1 to find a solution to the forex-based loans problem based on consultations with borrowers. If the deadline passes without result, the government has said it will act unilaterally on the matter.

Rogán told the paper that an economic solution to the forex-based loans problem would involve dividing the burden between lenders and borrowers: “The state would have only a regulatory role, thus one doesn’t have to think about how to involve the state or even the central bank, rather about how a just situation can be created with strong regulation.”

Added Rogán, “The two main goals are to reduce the burden of repayments for FX borrowers and to eliminate exchange rate risk.”

He said that if a fixed exchange rate is chosen as a solution, it would have to be suitable for borrowers who have already joined a scheme that caps the exchange rate on repayments as well as for borrowers who are more than 90 days behind on their repayments.

Inexpensive, Swiss franc-denominated loans were once the most popular retail lending product in Hungary, until the forint weakened, causing repayments to increase and putting many households at risk of default.

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