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Hungary’s bank sector liquidity to leap HUF 450 bln

A decision by the Hungarian Central Bank (MNB) to cut the mandatory reserve rate from 5% to 2% will put about HUF 450 billion of liquidity into the banking system, Econews calculated based on the MNB's statistical balance sheet from end-October.

The MNB's Monetary Council decided at a meeting on Monday to reduce the reserve rate with the aim of raising the bank sector's level of liquidity. The change, which brings Hungary's reserve rate in line with the ECB's, will come into effect at the start of the December reserve period.

Econews calculated that the decision will release 60% of mandatory reserves, which are practically level with the banking sector's current account balance. The sector's current account balance was HUF 759 billion at the end of October, the MNB balance sheet shows.

Business daily Napi Gazdaság said in its Tuesday issue that the reserve rate cut would give OTP Bank alone HUF 100 billion more to lend. When asked about the extra liquidity by the paper, OTP Bank said only that the reserve rate cut would strengthen further its already stable liquidity position. (MTI – Econews)