Template-Type: ReDIF-Article 1.0
Author-Name: Gergely Fábián
Author-Email: fabiang@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank (central bank of Hungary)
Author-Name: Róbert Mátrai
Author-Email: matrair@mnb.hu
Author-Workplace-Name: Magyar Nemzeti Bank (central bank of Hungary)
Title: Unconventional central bank instruments in Hungary
Abstract: The financial crisis revealed that – due to the reliance of the Hungarian banking sector on external funding – the deterioration in the liquidity position can be a significant obstacle to lending in spite of the ample forint liquidity at the system level. The Magyar Nemzeti Bank introduced several unconventional instruments in order to ease the liquidity and financial tensions, to ensure the forint and foreign exchange liquidity of the banking system and to overcome money market turmoil in the crucial FX swap market. Due to banks’ deteriorating lending capacity, the MNB continued to expand these instruments in early 2012. The set of instruments may reduce liquidity constraints, which restrain lending, and provides a safety net against unfavourable liquidity shocks.
Classification-JEL: E58, E59, G01
Keywords: financial crisis, unconventional central bank instruments, FX swap markets
Journal: MNB Bulletin
Pages: 14-23
Volume: 7
Issue: 2
Year: 2012
Month: June
File-URL: http://www.mnb.hu/letoltes/fabian-matrai.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:bullet:v:7:y:2012:i:1:p:14-23