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"Worst-case scenarios unlikely" under the new MNB management, says City

Worst-case scenarios are unlikely to materialize even after the new management of Hungary's central bank takes over from the current governor and his deputies later this year, London-based emerging markets analysts said on Thursday. In a research note titled "How Unorthodox Can the MNB Get?", released to investors in London, economists at Morgan Stanley said their worst-case scenario is one whereby the government seeks somehow to appropriate FX reserves and use them for external debt repayments. However, "this is mostly a hypothetical and we think rather remote risk". The government's standard modus operandi has been to issue HUF paper and swap it for FX at the MNB, and the debt management agency already sits on substantial cash reserves, plus some shares in MOL worth around €2 billion.