The European Central Bank said it’s opposed to the idea of Hungary’s central bank providing direct mortgages to retail borrowers for the building of energy-efficient homes.
In a legal opinion on planned changes to Hungary’s central bank law, the ECB said direct lending may violate European Union rules on monetary financing and expose the central bank to “substantial financial risks.”
“The Hungarian authorities are strongly encouraged not to allocate to the National Bank of Hungary the task of providing energy efficiency loans directly to consumers,” the ECB said in an opinion posted on its website.
The proposal follows comments from Governor Gyorgy Matolcsy last year that envisaged a broader role for the central bank in expanding green finances. Rate setters have been looking to quicken the inclusion of environmental sustainability criteria among lending incentives, already announcing some capital breaks for so-called green loans.
While it deemed direct mortgage lending as a step too far a central bank, the ECB endorsed a plan by Hungary’s central bank to add support for environmental sustainability as a secondary goal, beyond a primary target on price stability. A spokesman for Hungary’s central bank declined to immediately comment.