Central Bank governor Gyorgy Matolcsy speaks out (of line)

December 22, 2013


In response to Monday’s high court ruling that foreign currency based loan agreements are lawful, Central Bank chairman Gyorgy Matolcsy told Hir TV Saturday evening that, while the central bank acknowledged the decision, “we don’t like it.”  He went on to suggest that in order to solve the problem it would be necessary for parliament to enact a law and apply it retroactively.

Matolcsy said MNB’s opinion remains that the foreign currency based loans were a faulty product created as a result of a faulty economic policy, adding that unilateral changes to contracts are immoral and economically unacceptable.

Matolcsy said Central Bank interest rates might be further reduced to between 2.5 and 3.0 per cent, and that the Hungarian government had already saved HUF 90 billion as a result of interest rate cuts to date.

Matolcsy predicted that over the next six to eighteen months four of the eight large banks will leave Hungary and be replaced with new Hungarian-owned ones.  He considers this a positive development given that 58 per cent of the Hungarian banking sector is presently foreign-owned, a figure he considers “too high”.  He said one way of replacing the capital the major banks take with them would be for the Hungarian Development Bank (MFV Zrt.) to “change gears” (whatever that means).  He also noted that “there is a huge opportunity in the Takarekbank Zrt.”  He said the Central Bank expected banks from east-Asia and central-Asia to enter the Hungarian market.

“We need a new structure” built on small banks that compete with one another, said the Central Bank Governor.

Editor:  How would the Central Bank react to the Curia criticizing its decisions?  Or to parliament suggesting the Central Bank adopt certain monetary policies with retroactive effect?  We infer from Matolcsy’s comments that foreign ownership of Hungarian banks is not a problem so long as they hail from east or central Asia. At times it seems as though the inmates are running the asylum. 

Referenced in this article:

Matolcsy törvényt sürget a devizahitelesek mentése érdekében, 21 December 2014