BUDAPEST, June 23 (Reuters) - Governments across central and
eastern Europe should take steps to boost their domestic capital
markets and Hungary welcomes the EBRD's involvement in that
area, central bank governor Andras Simor said on Wednesday.
"I think it should be an extremely important part of the
governments' policies going forward, not just in Hungary but
across the region to build (local) capital markets," Simor told
a banking conference.
He said the new Hungarian government's policies were so far
unclear in this respect, but noted that the European Bank for
Reconstruction and Development (EBRD) also supported the
development of local capital markets in the region.
Hungary's central bank started a mortgage bond purchase
programme in February to reduce the liquidity premium in that
segment versus the government debt market and Simor said the
first signs were encouraging.
"Of course this is not enough. In this respect also the
international institutions have a role to play," Simor said.
"I am very encouraged by the fact that especially the EBRD
is very active in this field and is trying to come up with
proposals on how these local capital markets in the various CEE
countries can be developed further," he said.
The EBRD said in May that it planned to invest in developing
the region's capital markets to help provide banks with
long-term funding in local currencies and to encourage domestic
savings.
EBRD finance vice president Manfred Schepers told Reuters on
the sidelines of the conference on Wednesday that the bank was
ready to throw its support behind developing capital markets
across central Europe and also in Russia.
"I think the key issue is that in all countries, we need to
find a way of enabling credit growth in domestic currency and
enabling savings in domestic currency," Schepers said.
"Obviously that is a strategy you can follow with certain
policy issues and market-related issues in the larger countries,
Russia, Poland, Hungary but in most of the countries this is a
very difficult process."
He said countries where the EBRD could take a role in
developing capital markets needed a critical mass of deposit and
institutional savings, government and private entities able to
raise capital, as well as a predictable economic framework.
"In the CIS, of course in Russia, in Kazakhstan, have a
critical mass in those areas, in central Europe you have Poland
and Hungary and Romania that have sufficient critical mass and
predictable macro policies," Schepers said.
He said in Russia and Poland the EBRD could help in
deepening equity markets further, while in central Europe the
focus was on the ability for medium-sized companies to use the
local equity markets as a tool for raising more equity capital.
"There needs to be some emergence of a regional equity
market," Schepers said. "Already in the euro zone you see that,
huge concentration of stock exchanges and the same thing needs
to happen in central Europe."
He said the Hungarian mortgage bond market needed rapid
reform and that bank could help in projects to develop the
Hungarian government bond segment but at the end of the day, it
was up to the private sector to create the market.
"There needs to be some reform so that all the banks can
effectively use the instruments in certain transactions,"
Schepers said.
"The swap markets, which are very important across the
region, none of these markets will develop if you do not have a
derivative market that develops."
(Reporting by Krisztina Than and Gergely Szakacs)
