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Bank Association refers early full repayment scheme to Constitutional Court

Hungary's Bank Association is referring the law, incorporating the government’s plan to allow forex debtors to repay their debt early and fully, to the Constitutional Court, the association said in a statement on Monday.

The petition asks the court to establish that the law concerned is against Hungary's constitution.

Earlier, the President of Hungary, Pál Schmitt told the Bank Association in an open letter that "possible harms coming the banks way are not larger than what financial institutions are expected to bear in the name of mutual and common risk taking". The President thus explained why he signed the bill into law, answering a letter of the Bank Association asking him to send the draft bill to the Constitutional Court.

Under the government-authored scheme, retail forex mortgages may be repaid early, in full, at a discounted exchange rate, with banks covering the cost of the difference from the market exchange rate.