The Wall Street Journal blog is reporting that Hungary’s central bank could provide loans to banks operating in the country by using its foreign currency reserves. Concern has been increasing over the financial sector’s ability to withstand the compensation that Hungary’s government insists is due bank clients who borrowed extensively in foreign currencies before the financial crisis. The website reports that the central bank would provide roughly €3bn in loans as an initial step. The remaining €8bn could be made available by the central bank by the end of the year. Hungary’s foreign exchange reserves totalled roughly €35bn as of the end of July, according to wsj.com.
