The capital market plays a fundamental role in competitive economies, and Hungary must change the way it thinks about the role of the stock market, Nagy said, adding that the central bank has picked out the first 50 small and medium-sized firms it thinks are ready to be listed on the stock exchange.

The bank has reached out to the owners of these companies and has talked to them about the benefits of listing their shares.

Nagy, who is also the chairman of the Budapest Stock Exchange, said that although it may be cheaper for companies to take up EU funds than funding from the market, in five years’ time they would not be able to rely on EU funding to the extent that they do now.

After 2020, companies will have to rely on raising capital either in the form of bank credit or by listing their shares on the stock market, Nagy said. EBRD Vice President Alain Pilloux noted that the EBRD had a strong presence on central and eastern European stock markets, as the development of these markets has a significant impact on economic growth.

He noted that the EBRD was directly present on the Hungarian stock exchange with shares in Erste Bank Hungary, adding that the bank also cooperates with other funds in the region.

Republished with permission of Hungary Matters, MTI’s daily newsletter.