Only banks in Hungary should buy MNB-bills
Hungary's central bank should only allow banks operating in Hungary to buy the central bank's two-week bills and it should cut access to the key central bank facility for foreign banks who don't have operations in the country, Hungary's Banking Association head said Monday. The two-week bills are the central bank's main tool for adjusting liquidity in the country's banking system, with retail banks using their excess funds to buy central bank bills. The central bank's key policy rate is the interest rate it offers on the two-week bills. "I have to represent the interests of the banks already present in Hungary. It would be worth considering that banks not taking any risks in Hungary should have no access to the bills. That would mean several hundreds of billions of forints," said Mihály Patai, head of the Banking Association. Patai was making his comments after a meeting of the top executives of Hungary's biggest bank and the central bank earlier Monday. The central bank wants to reduce the growing stock of two-week bills to decrease the amount of taxpayer money the central bank spends on the bills' interest, new central bank Governor György Matolcsy said Thursday. Matolcsy last week introduced a package of measures potentially worth up to HUF 500 billion to stimulate growth in Hungary's flagging economy. There are 44 banks in Hungary including the local units of Erste Bank, UniCredit, KBC Bank and Italian banking group Intesa Sanpaolo SpA.
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