ECB gives Hungary €5bn credit line

Hungary’s central bank has turned to the European Central Bank for a €5bn credit line after a day of financial uncertainty during which the country’s currency and stock market fell sharply and bankers reported credit shortages.

As concern spread across eastern Europe about the impact of the global financial crisis, the ECB and the Hungarian National Bank (MNB) on Thursday announced they had agreed on a facility for Hungary to borrow up to €5bn to provide additional support to the MNB’s euro liquidity provision.

The forint, which slumped 5 per cent on Wednesday, rose 2 per cent on Thursday on the news, hitting Ft 266.25 against the euro in early trading.

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The move marks the first time the ECB has publicly lent this way outside the eurozone and follows calls from Hungary’s prime minister earlier this week for the ECB to make available its liquidity support facilities to non-eurozone EU members.

The Hungarian central bank announced a new overnight FX swap tender facility last week in order to boost market liquidity

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