BUDAPEST, May 20 (Reuters) - Banks in Hungary have started shifting funds out of the central bank's main two-week liquidity instrument into government debt after the regulator announced plans to transform the instrument last month, central bank Director Marton Nagy said on Tuesday.
"Many banks have moved from two-week deposits toward government debt. One look at the government debt auctions or the yields shows what has happened in the past month," Nagy told a banking conference organised by financial news website portfolio.hu.
The central bank expects to transform its two-week bill facility into a two-week deposit from August to drain up to 600-1,000 billion forints worth of liquidity out of this instrument. (Reporting by Gergely Szakacs and Marton Dunai)