Hungary abolished the last remaining controls on foreign capital flows in 2001, and money transfers to Hungary may now be freely sent as well as money transferred out of Hungary. The forint (HUF) is a fully convertible currency, and foreign exchange is readily available.
There are very few exchange controls on inward or outward foreign investment. Foreign currencies can be bought and sold freely, and there are no restrictions on either residents or non-residents holding bank accounts in foreign currencies. There are limits, however, on mortgage borrowing in foreign currencies, and non-resident investment in shipping, airlines and asset management is subject to restrictions.
As in many European countries, Hungary limits the amount of hard currency that may be carried in or out of the country without the need for declaration, as part of the country’s anti-money laundering/counter-terrorist financing policies. This is set at the equivalent of €10,000 per trip; cash transfers above this level must be declared and justified to customs authorities.
The Central Bank of Hungary (Magyar Nemzeti Bank, MNB) was merged with an independent agency, the Hungarian Financial Supervisory Agency, in October 2013 to form a single oversight body. The MNB oversees the health of the national financial system, seeks to maintain price stability, and supports the government’s economic policy goals.
The State Financial Institutions Commission provides authorisation to all money exchange businesses and monitors their compliance with anti-money laundering and terrorism financing legislation.
National monetary policy is set with reference to the European Central Bank (ECB). Hungary joined the European Union (EU) in 2004 and the Schengen free-movement zone in 2007. However, it is not a member of the 18-country eurozone. Its EU accession agreement stipulates that the country must eventually adopt the euro, but Hungarian officials have announced no short-term plans to do so.
Its national currency, the Hungarian forint (HUF), has been on a free floating exchange rate system since 2008. The forint’s value in benchmarked against the euro, but is determined by market supply and demand. The MNB uses the monetary policy tools at its disposal to reach a target inflation rate that is set annually; in 2014, the medium-term inflation target was set for 3%, but it was closer to 0.2% as of August.
Hungarian households primarily relied on foreign exchange mortgages and other lending between 2004-10, as forex interest rates tended to be much lower than HUF rates. The country’s private forex indebtedness - and thus exposure to a weakening of the forint against the euro - reached unsustainable levels by 2010, prompting the MNB to implement a one-year ban on foreign currency denominated loans to residents from 2010-11, and now employs several restrictions meant to reduce demand for forex loans. Today, Hungarian financial institutions are only permitted to issue foreign currency mortgages to individuals who can show proof of regular monthly income, in the same currency, which is 15 times higher than minimum wage. Purely collateral-based forex lending is no longer permitted.
The forint is frequently abbreviated as Ft. The central bank issues banknotes in values of Ft500, Ft1000, Ft2000, Ft5000, Ft10,000 and Ft20,000. Coins are produced in denominations of Ft5, Ft10, Ft20, Ft50, Ft100 and Ft200.
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