Causes of Foreign Currency Lending – Possibilities of Intervention – Ways of Intervention
The study examines foreign currency lending in Hungary. It states that: 1. The original reason behind foreign currency lending was the difference between the interest on foreign currency and Hungarian forint loans; 2. Foreign currency loans showed otherwise uncreditworthy clients as creditworthy; 3. Debtors and creditors are both at fault, therefore, responsibility and losses should be shared accordingly. The state can intervene through regulation or support. Any type of support means that the losses incurred by the debtor and creditor are spread between taxpayers who are not involved in the deal, therefore, such support can only be justified by social solidarity, whereas regulation can be unlimited. Recommendation: 1. State intervention should target the housing rights of non-performing families; 2. In the interest of intervening with the lowest social cost, a special real estate fund should be created (which can be the National Asset Management Company), which should enter into a framework agreement with the commercial banks, according to which, depending on their eventual surplus liquidity, these banks would subscribe to real estate bonds – instead of government bonds – issued by the real estate fund, which would be guaranteed by the state and earn similar yields and have the same tenor as the current two-week bonds, issued by the central bank, thereby providing funding to ensure the continued housing rights of families that have become insolvent and unable to meet their loan repayment obligations.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Basso, Henrique S. & Calvo-Gonzalez, Oscar & Jurgilas, Marius, 2007. "Financial dollarization: the role of banks and interest rates," Working Paper Series 0748, European Central Bank.
When requesting a correction, please mention this item's handle: RePEc:pfq:journl:v:57:y:2012:i:3:p:358-370. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Pál Péter Kolozsi)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.