Economic Minister asks EBA opinion on foreign-currency loans

EU

Minister of National Economy Görgy Matolcsy asked for an opinion of the European Banking Authority (EBA) concerning difficulties in the Hungarian financial system resulting from foreign-currency indebtedness of the general public in Hungary.

In a letter sent to EBA, the minister emphasised that the high proportion of foreign-currency debts caused serious problems to households in Hungary following the economic crisis and the appreciation of the Swiss franc.

Matolcsy asked the opinion of EBA on what risks can result for debtors from the fact that most of the household debt in Hungary consists of foreign currency – mostly Swiss franc-denominated – mortgage debt; in what proportion this situation is a result of inadequate EU and local regulations; are there pre-crisis international cases when such a situation occurred and was handled more efficiently than in Hungary; and does the EBA agree with the Hungarian view that the risks of foreign-currency indebtedness should be decreased by macro-prudential and consumer protection regulations in Hungary as well as in the EU as a whole.

The Ministry wants the EBA analyses to help the special working groups elaborating options for protecting peoples' homes and finding out the historic process leading to widespread foreign-currency indebtedness in Hungary.

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