BANKING SYSTEM OF HUNGARY

Hungary has a two-level banking system. The first level is the National Bank of Hungary which, being the central bank, defines and implements the monetary policy consistent with the protection of the value of the national currency and has the exclusive right to issue banknotes and coins. The National Bank performs its duties andcarries out its obligations independently from the Government or any other institution or body. The major objective of the National Bank is to achieve and maintain price stability, and at the same time to support the economic policy of the Government through monetary control.

The national bank is in direct connection only with the commercial banks that are on the second level of the system, but not with individuals and business entities. Commercial banks may maintain bank accounts for individuals and business entities, accept deposits from, and extend credit to them, and may provide other financial services and auxiliary financial services as well.

In Hungary credit institutions and financial enterprises shall be construed as financial institutions. Credit institutions may be banks, specialized credit institutions or cooperative credit institutions (savings-, or credit cooperatives). Financial enterprises are (i) financial institutions licensed to
perform one or more financial service with the exception of certain activities, (ii) financial holding companies, and (iii) clearing houses for credit institutions. All financial institutions are subject to the supervision of the Hungarian Financial Supervisory Authority.