The National Bank of Hungary (MNB) has drawn the attention of the economy minister to the eventual consequences of making the Hungarian State Treasury a collector of deposits, MNB Governor András Simor said in response to an Econews question at a press briefing on Tuesday.
The National Economy Ministry must draw up without delay legislation allowing the Hungarian State Treasury to collect deposits according to a government resolution published in the fresh issue of official gazette Magyar Közlöny. The resolution amends a government resolution published last spring on "measures necessary to increase the holding of government securities among households".
In an opinion sent to the economy minister, the MNB has asked him to consider the proposed measure from the standpoint of neutrality of market competition and also to consider the possible effects of the move on lending and GDP growth, Simor said.
"There is no free lunch", if the state soaks off deposits from the banking system, the latter will have less resources to lend, he said when asked to elaborate. The government must consider whether it intends to finance the state from current accounts or from several-year funding, he added.