Strange things are happening in Hungary's banking sector

Continuing my Forbes series on the mysteries of banking in Eastern Europe:
The Hungarian banking system has been a thorn in the Hungarian government’s side for quite some time. A large proportion of it is foreign-owned, which makes it more likely that there would be outflows of capital and restriction of essential lending activity in a crisis. And, of course, it’s more difficult to coerce foreign-owned banks into doing things that the government wants, such as cheap lending to favored borrowers and buying up government debt
Not only are many of its banks foreign-owned, they lend foreign currencies too. A high proportion of Hungarian mortgages are in euros or Swiss francs. Banks extended foreign-currency mortgages to Hungarian households at a time when the exchange rate to forints was favorable. But since then the international value of the forint has fallen, mainly due to a sustained period of monetary easing by the Hungarian central bank. This has improved economic conditions but left Hungarian households struggling to pay their foreign-currency mortgages.
So what are the Hungarian authorities doing about this? Find out here.

Related reading:

The trouble with Hungary.....

Potential for crisis aftershocks at Eastern European banks - Neil Buckley, FT

English: Hungarian National Bank, Budapest Mag...

Hungarian National Bank. (Wikimedia)


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