The National Bank of Hungary unveils macroprudential strategy

Budapest, January 27 (MTI) – The National Bank of Hungary (NBH) on Wednesday launched a macroprudential strategy that aims to prevent or minimise the impact of financial crises in future.

The central bank is laying out its macroprudential strategy because losses from the international financial crisis have shown that the stability of the financial system cannot be guaranteed solely by microprudential intervention.

The central bank wants to encourage responsible risk-taking by financial actors, strengthen the resilience of the financial system and support the financial system in aiding sustainable growth.

In its strategy, the NBH noted the importance of cyclical and structural risk factors to financial stability, mentioning moral hazard, ex-post state intervention and excessive risk taking as cyclical factors and liquidity shortages, feedback into the real economy and financial institutions being “too big to fail” as structural factors.

As countermeasures, the NBH is setting out intermediate objectives such as moderating credit and collateral growth, moderating and preventing liquidity shortages, limiting risk exposure in key sectors, moderating bad financial incentives with special focus on moral hazard and strengthening the adaptability of the financial system.