The WSJ is reporting that in an attempt to firm the national currency, the forint, Hungary’s central bank use its foreign exchange reserves to help bail out households sinking under the weight of foreign-currency loans. It will do this by selling banks the money they’ll be needing in order to turn their clients’ loans in foreign currencies (Swiss francs, commonly) into forint. The government ruled that increased rates charged by the banks were illegal and has insisted they provide compensation. Not only is the move politically expedient, the hope is that it will boost the economy by giving Hungarian consumers more confidence to open their wallets a bit wider. The WSJ reports that 19 percent of household loans were currently classified as nonperforming.
