Another MNB step towards de-sterilization announced today

HUNGARY - In Brief 12 Jan 2016 by Istvan Racz
Today, the MNB announced that it will discontinue to offer 2-week deposits after April 30, 2016, raise the total volume of interest rate swaps offered at tenders by 20% and further improve the pricing of IRS contracts. The MNB intends to implement the first of the above by gradually reducing the stock of 2-week deposits from the current maximum HUF1000bn to zero between end-March and end-April, i.e. within a single month's time. The MNB does this with a view to loosening monetary conditions further and to supporting the implementation of the ÁKK's 2016 borrowing plan. They specifically said they expect HUF400-800bn of extra demand for HUF-denominated government debt from banks, stemming from the amounts squeezed out of the MNB's balance sheet this way. Just as a reminder, the ÁKK is planning gross forint debt issuance at HUF5843bn for 2016, against a much smaller HUF543bn (EUR1.7bn) issuance of FX debt. Out of the foregoing, the announcement on IRS policy is new on the details but is no surprise as regards the concept. The MNB has been repeatedly speaking about upcoming measures in this area, making it very clear that it aims to help press down long term government debt yields by these measures. However, the statement on the discontinuation of the 2-week deposit facility is genuinely new. So far the MNB has only said that following a sharp cut in the stock of 2-week deposits from HUF4512bn on September 16, 2015 to HUF958bn at end-year (which meant a HUF727bn cut in total sterilization by the central bank as the stock placed with the MNB as 3-month deposits ran up to HUF2987bn in the meantime) was to be followed by the introduction of a 100% LCR from April 1, 2016, and ...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.