The ECB expresses concern about the independence of the central bank of Hungary

On 14 December 2011 the Governing Council of the European Central Bank (ECB) adopted Opinion CON/2011/104 on draft legislation regarding the Magyar Nemzeti Bank (MNB), the central bank of Hungary.

On 21 December 2011 the Governing Council of the ECB received a new request, dated 13 December 2011, from the Hungarian Ministry for the National Economy for an opinion on a revised draft law, which was submitted to the Parliament on 16 December 2011 and contained substantive amendments in comparison with the version of the draft law on which the ECB had issued Opinion CON/2011/104.

Furthermore, the ECB took note of a new draft constitutional law, which would authorise the legislator to merge the MNB with the Financial Supervisory Authority and create a new institution. This draft constitutional law has not been submitted to the ECB for consultation.

On 22 December 2011 the Governing Council of the ECB adopted Opinion CON/2011/106 on the independence of Magyar Nemzeti Bank. In this opinion, the Governing Council of the ECB expresses its concern about, inter alia:

Provisions in the draft law on the MNB that could undermine the central bank’s independence. In particular, against the backdrop of constant changes in the composition of the MNB’s decision-making bodies, the increase in the number of members of the Monetary Council, together with the possibility of increasing the number of deputy governors – without due consideration of the MNB’s needs – gives rise to concern as to whether this could be used to influence the decision-making process, to the detriment of central bank independence.

• Provisions in the new draft constitutional law that affect the personal independence of the central bank’s governor. In particular, by appointing a new President with authority over the Governor of the MNB, who would become the Vice-President of the new institution, the personal independence of the MNB’s Governor would be impaired and Article 14.2 of the Statute of the European System of Central Banks concerning the possible reasons for dismissing the Governor of a national central bank would be breached.
• The Governing Council of the ECB has requested the Hungarian authorities to bring their consultation practice into line with the requirements of European Union law and to respect the obligation to consult the ECB. Three major revisions of the central bank law in 18 months are incompatible with the principle of legal certainty.