IDEAS home Printed from https://ideas.repec.org/a/mnb/bullet/v9y2014i2p36-44.html
   My bibliography  Save this article

The effect on payments of the conversion of MNB bills into deposits

Author

Listed:
  • László Bodnár

    (Magyar Nemzeti Bank (Central Bank of Hungary))

  • Miklós Luspay

    (Magyar Nemzeti Bank (Central Bank of Hungary))

  • Annamária Madarász

    (Magyar Nemzeti Bank (Central Bank of Hungary))

Abstract

In April 2014, a decision was made at the central bank to convert the two-week MNB bills into deposits as of August 2014 with the objective of “channelling HUF liquidity from the two-week MNB bills to government securities”.1 This also means that this shortterm instrument is removed from the pool of eligible collateral accepted by the MNB, and thus credit institutions will no longer be able to use it for the execution of payment transactions; i.e. as collateral for fulfilling their clients’ payment orders. Since the two-week MNB bill comprises the bulk (nearly 40 per cent) of the securities pledged by banks as collateral, the central bank decision will definitely require some adjustment on the part of credit institutions if they wish to maintain the level of liquidity previously available for them in the payment systems. In our paper, we examine the possible adjustments of banking sector participants in response to the conversion of the MNB bill into deposits in terms of liquidity and, based on historical data, we attempt to analyse the impact on credit institutions resulting from the removal of the MNB bill from the pool of eligible collateral.

Suggested Citation

  • László Bodnár & Miklós Luspay & Annamária Madarász, 2014. "The effect on payments of the conversion of MNB bills into deposits," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 9(2), pages 36-44, July.
    • Handle: RePEc:mnb:bullet:v:9:y:2014:i:2:p:36-44
    as

    Download full text from publisher

    File URL: https://www.mnb.hu/letoltes/bodnar-luspay-madarasz.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Csaba Balogh, 2009. "The role of MNB bills in domestic financial markets. What is the connection between the large volume of MNB bills, bank lending and demand in the government securities markets?," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 4(3), pages 6-13, October.
    2. Miklós Luspay & Annamária Madarász, 2014. "The effects of the introduction of intraday clearing on turnover in Hungarian payment systems," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 9(1), pages 48-57, March.
    3. Lóránt Varga, 2010. "Introducing optional reserve ratios in Hungary," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 5(3), pages 57-66, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pulay, Gyula & Máté, János & Németh, Ildikó & Zelei, Andrásné, 2013. "Budgetary Risks of Monetary Policy with Special Regard to the Debt Rule," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(1), pages 11-34.
    2. Daniela Gabor, 2012. "Managing Capital Accounts in Emerging Markets: Lessons from the Global Financial Crisis," Journal of Development Studies, Taylor & Francis Journals, vol. 48(6), pages 714-731, June.
    3. György, László & Veress, József, 2013. "The Possible Causes of and Means of Avoiding External Financial Vulnerability – Hungary versus Singapore," Public Finance Quarterly, Corvinus University of Budapest, vol. 58(1), pages 53-75.
    4. Daniela Gabor, 2011. "Paradigm shift? A critique of the IMF’s new approach to capital controls," Working Papers 1109, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    5. Gergely Fábián & Róbert Mátrai, 2012. "Unconventional central bank instruments in Hungary," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 7(2), pages 14-23, June.
    6. András László, 2016. "Impact of the Funding for Growth Scheme on the Hungarian economy," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 15(4), pages 65-87.
    7. Mihály Hoffmann & Zsuzsa Kékesi & Péter Koroknai, 2013. "Changes in central bank profit/loss and their determinants," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 8(3), pages 36-48, October.

    More about this item

    Keywords

    RTGS; payments systems liquidity; liquidity management; collateral management; security portfolio; monetary policy tools;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mnb:bullet:v:9:y:2014:i:2:p:36-44. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maja Bajcsy (email available below). General contact details of provider: https://edirc.repec.org/data/mnbgvhu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.