Czech households' debt to banks and credit unions rose by CZK 9.24
billion to almost CZK 1.713 trillion in August when compared with July
data, this according to statistics released by the Czech National Bank on
Monday. In year-on-year terms the rise was higher than CZK 101.9 billion.
The debt of non-financial corporations rose by CZK 16 billion compared to
July and currently amounted to 1.145 trillion crowns. In year-on-year
terms, this was a CZK 42 billion increase.
Household debt has been rising continuously since February 2016, with mortgages making up roughly three-quarters of the entire debt, according to the Czech National Bank.
The Czech National Bank re-issued 30,000 sets of six 20-crown coins on
Wednesday to mark the centenary of monetary separation from the former
The six coins featuring famous First Republic politicians such as Tomáš Garrigue Masaryk and Edvard Beneš, as well as the first central bank governors, were first issued in 2018.
At that time, collectors could exchange them for coins of the same value. Now the cost for six coins has been set at CZK 590. Another 20,000 sets of the coins are due to go on sale this autumn.
The countercyclical capital buffer rate for exposures located in the Czech
Republic will increase to 2 percent as of July 1, 2020, the Czech National
Bank (ČNB) announced.
The rise was motivated by an increase in risks linked with the growth phase of the financial cycle of the Czech economy and partial strengthening of signals of vulnerability of the domestic banking sector, the central bank said.
The ČNB sets the rate on a quarterly basis, always with effect from the following year. In the event of a sudden turn in the financial cycle, the bank is ready to lower the rate or even enable a full dissolution of the buffer, central bank governor Jiří Rusnok said.
The Czech National Bank has lowered its forecast for the development of
public finances in 2019 and 2020, in its Inflation Reports summary
published on Friday. The bank now expects a surplus of 0.3 percent of GDP
in 2019, as opposed to February’s more optimistic estimate of 1.2
percent. The new expectations for 2020 have gone down even more sharply
from February’s 1.3 percent to the current forecast of 0.2 percent. This
year, public debt is expected to sink from 32.7 percent of GDP to 30.9
percent. Next year, a further decrease to 29.3 percent forecast.
In a prognosis released on Thursday, the bank also lowered the country’s economic growth projection to 2.5 percent in 2019 and 2.8 percent in 2020. A further decrease in the Czech crown’s exchange rate is also expected.
The Bank Board of the Czech National Bank raised its basic interest rate to
2 percent, an increase of 0.25 percent, the Czech News Agency reports. It
is the first rise since November 2018 and interest rates are now at their
highest in the past 10 years.
Analysts told the Czech News Agency the increase is mainly due to developments in the country’s economy, with inflation rates rising above predictions in the first quarter of 2019 and the exchange rate for the Czech crown weaker than the bank predicted in February.
The bank has also decided to go ahead with 0.25 percent raises in the Lombard rate, which deals with short-term liquidity loans to commercial banks and the discount rate.
Česká spořitelna, the second biggest player on the Czech mortgage market, is planning to launch a special type of housing loan under which up to 90 percent of the value of a property may be borrowed, the news site iHned.cz reported on Friday. The condition would be that customers be first-time buyers.
100 years ago the Czechoslovak Assembly decided on the name of the new republic’s currency - the koruna. Despite a variety of original proposals, the delegates ended up being rather conservative in their choice, voting for a name that had also been used for the currency of Austria-Hungary. To commemorate the date, the Czech National Bank has issued a rare collection of gold-silver coins.
On Monday, a new amendment went into effect which seeks to tackle the shady tactics employed by many exchange offices in the Czech Republic. They include the right of clients to cancel an exchange up to three hours after the transaction, as well as the prohibition of separating the exchange payment from the rate itself.
The Czech National Bank (ČNB) has denied speculation it might have acted
through foreign counterparts to limit crown weakening at the end of 2018,
In response to a question on market rumours, board member Tomáš Holub told reporters on the margin of a conference in Prague he could unambiguously reject that happened.
Any swings in the ČNB’s balance sheet would have been caused by autonomous action by foreign clients of the central bank, he said.
The Czech National Bank has lowered its surplus predictions for the public
finances in 2019 and 2020. In November officials said the surplus should
reach 1.3 percent this year. However, they have now revised that figure to
1.2 percent. Meanwhile, the central bank has reduced its surplus estimate
for next year by two percentage points.
Overall growth predictions for the Czech economy in 2019 have also been cut to 2.9 percent, four decimal points lower than the November forecast.
Government debt is still very low in the Czech Republic compared to among its Visegrad Four neighbours. In 2017 it stood at 34.6%, more than 15 percent lower than in Slovakia and nearly 40 percent behind that of Hungary.