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Hungary’s Regulatory Requirements for Banks and Financial Institutions Tightened

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Budapest, Hungary - The Hungarian National Bank (MNB) has announced that banks and financial institutions operating in the country will be subject to stricter regulatory requirements, aimed at maintaining economic stability and promoting responsible lending practices.

Key Features of the New Regulations

According to the MNB’s policy instrument, credit institutions licensed to operate in Hungary must deposit a minimum reserve at the central bank equal to 10% of their funds with maturities less than two years. This required minimum reserve must be met on both a daily and monthly average basis.

Required Reserve System Rules

The rules governing the required reserve system are outlined in several MNB decrees, including:

  • Decree on the Calculation, Method of Allocation and Placement of Required Reserves
  • Decree on the Required Reserve Ratio
  • Decree on the Interest Rates Related to Required Reserves

Recent Regulatory Changes

In recent months, the MNB has issued several decrees aimed at implementing new regulatory requirements for banks and financial institutions. These include:

Key Decrees

  • Decree on the Required Reserve Ratio, effective from March 10, 2023 to December 31, 2023
  • Decree on Interest Rates Related to Required Reserves, effective from October 1, 2023 to November 1, 2023
  • Decree on the Interest Payable on Required Reserves, effective from May 24, 2023

Impact on Banks and Financial Institutions

The new regulatory requirements are expected to have a significant impact on banks and financial institutions operating in Hungary. These institutions must ensure compliance with the MNB’s rules and regulations, which may involve changes to their lending practices and reserve management strategies.

Key Regulatory Requirements

  • Credit institutions must deposit a minimum reserve equal to 10% of their funds with maturities less than two years
  • The required minimum reserve must be met on both a daily and monthly average basis
  • Banks must comply with specific rules outlined in MNB decrees, including the Decree on the Calculation, Method of Allocation and Placement of Required Reserves