The European Central Bank (ECB) and the Magyar Nemzeti Bank (MNB) have agreed to set up a repo line arrangement to provide euro liquidity to Hungarian financial institutions to address possible euro liquidity needs in the presence of market dysfunctions due to the COVID-19 shock.
Under a repo line, the ECB provides euro liquidity to a non-euro area central bank in exchange for adequate euro-denominated collateral.
Under the repo line, the MNB will be able to borrow up to €4 billion from the ECB. The maximum maturity of each drawing will be three months. The repo arrangement will remain in place until the end of June 2021, unless an extension is decided.