The Swiss National Bank will suspend foreign exchange swaps with Hungary and Poland next week, it said, citing improved funding conditions for east Europe's crisis-hit banking sector.
The SNB said the last swap operation, providing Swiss francs against euros for the Hungarian and Polish central banks, would be conducted on January 25. The SNB will also suspend this swap operation with the European Central Bank.
The Swiss National Bank and the Hungarian central bank launched a euro-Swiss franc swap agreement in January 2009 to provide Swiss franc funding to banks which faced difficulties in getting access to franc funding when liquidity dried up. The move had aimed to replenish the supply of Swiss francs, popular in Hungary for mortgages due to low Swiss interest rates, to the banking sector, which was suffering a shortage of the currency.
One analyst said the decision signaled another step out of a deep financial crisis for Hungary, which became the first European Union member to seek international aid when its markets went into a tailspin in October 2008. (Reuters)