Matolcsy: Time has come for targeted tools

Convincing arguments show that the impact of a stronger dollar on tighter financial conditions adversely affects credit availability for working capital of exporting firms / Valentina Bruno, Hyun Song Shin, VOX, CEPR Policy Portal, 7/27/2021/.

On one hand there is indeed a semi-automatic link between exchange rates and exports through the trade competitiveness channel of exchange rates. In order to fully benefit from a “flexible exchange rate policy”, let’s simply put it cheap money, one has to continuously launch structural changes.

On the other hand, we need targeted credit lines for the SME sector to enhance employment and also for contributing to the performance of the export sector. Targeted credit lines should come from central banks via the banking system.

This is exactly what the Hungarian central bank has been doing since 2013 and it works really well.

Governor Matolcsy, MNB, the Central Bank of Hungary

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