"The government's financial help to banks should not have been dubbed a “rescue package", since Hungary's banking system is stable with good liquidity and profitability numbers therefore it does not need to be rescued, said András Simor, Governor of the National Bank of Hungary (NBH) at a conference on Wednesday.The only reason the country has this package is because they created such schemes all over Europe, and it was necessary to maintain the competitiveness of local banks, he added.
As the support of banks in the EU is unbiased and does not distort competition, Hungarians should not “listen to their heart" that tells them to lend a hand only to local banks.
“We should use our brain before talking nonsense waiving the national banner," Simor told a conference organised by the Confederation of Hungarian Employers and Industrialists (MGYOSZ).
While recent measures did stabilise the economy for the short term, Hungary will remain vulnerable unless it manages to convince the outside world that in the long term it will have a swiftly growing economy, he noted. Then the question will be how to manage the next crisis, he added.
“Hungary is great at managing crises. But when it is done, we just lie back and keep doing what led to the crisis in the first place."
In order to avoid that, Hungary needs to have a macroeconomic environment that creates the basis for growth - “and for that we need a lot of changes in this country".
Simor also said the global financial turmoil gave Hungary an opportunity to reach a critical mass among those who are committed to seeing the reforms through."
Source: Portfolio Online Financial Journal
04.12.2008