BUDAPEST, Nov 16 (Reuters) - Hungary’s forint on Monday became the first central and eastern European currency to be added to the CLS settlement system, opening the way to more trading in the forint by reducing the amount of risk banks and other investors bear when doing so.
CLS is a specialist US financial institution that provides settlement services to the foreign exchange market, a fundamental piece of infrastructure which reduces banks’ costs and exposure to the risk of another party defaulting before transferring funds agreed under trades.
Reuters reported last month that the Hungarian central bank had set a target of Nov. 16 for joining the system, which covers almost all of global wholesale foreign exchange trading and now some 18 currencies.
“CLS ... has started settling payment instructions in the Hungarian forint (HUF) on behalf of its settlement members,” the company said.
“While already one of the world’s top 25 most active currencies, we believe that the forint is a currency with significant growth potential,” CLS Chief Executive David Puth added. (Reporting by Gergely Szakacs)