The National Bank of Hungary (MNB) had been warning about the risks associated with foreign-currency-denominated loans since 2001, though had no means of preventing the foreign-currency debt crisis that has been afflicting borrowers in Hungary since 2008, MNB Governor András Simor said at a banking conference in Budapest.
The MNB governor asserted that “It is easy to be clever in retrospect,” noting that the proposal of Hungary's new Fidesz government to be inaugurated on May 28 that foreign-currency debt be converted into forint debt would entail additional expenses of 3.5%.
Simor said that high external debt, government debt, foreign-currency debt and credit-to-deposit ratio represent the most significant sources of economic and financial vulnerability in Hungary, noting that the country's external debt and government debt as well as credit-to-deposit ratio are all above the central and eastern European average.
The MNB governor remarked that that long-term forint resources are needed to decrease the foreign-currency debt of Hungary's banks, adding that the MNB has purchased HUF 15 billion (€53.76 million) in mortgage certificates on both the primary and secondary markets in order to help in this regard. (MTI-Econews)