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Forex debtor rescue plans – the left-wing angle

August 29th, 2013

Figyelő fears that the rescue scheme may encourage debtors to default. Népszabadság warns that imposing excessive burdens on banks will harm recovery.

Reacting to a forex debtor relief package outlined by the National Bank (See BudaPost, August 27), the Banking Union put forward its own scheme whereby the banks would volunteer to contribute hundreds of billions of forints to alleviate the burden on households whose mortgages are denominated in foreign currencies.

Figyelő’s macroeconomic analyst György Dózsa deplores what he calls “the paternalistic messages which are constantly emitted by the government”, including a never-ending anti-bank discourse and a demand that banks shoulder successive rescue efforts. An increasing number of debtors, he asserts, fail to service their debts not because they are unable to do so, but because they expect the government to come to their rescue. That is one of the worst scenarios, Dózsa argues, for it may well deepen a problem it is intended to solve.

In a front page editorial, Népszabadság suspects that the banks must have been given behind the scenes promises by the authorities before they came up with their apparently selfless proposals. The author cautions against laying too much burden on financial institutions, for ”in the absence of a sound banking system, the economy is bound to drown”. Any solution which damages the economy, Népszabadság warns, would also be an “unpardonable sin” against those (the majority of Hungarians) who never made the mistake of indebting themselves in foreign currencies.

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