Hungary parliament approves amendments to central bank bill

In Hungary

Parliament on Friday approved amendments that the body’s Economic Committee and MPs of the governing Fidesz party submitted to the Central Bank Act bill.

The approved amendments modify the bill in response to recent criticism on the part of the European Central Bank that the planned legislation would compromise the central bank’s independence.

Final vote on the bill is to take place next week.

The amendments to the central bank bill approved on Friday stipulate the following:

- Parliament will elect members of the National Bank of Hungary’s rate-setting monetary council as at present rather than Hungary’s president as proposed in the original version of the bill;

-a declaration that the government will not attempt to influence the National Bank of Hungary (MNB) or its leaders and the governor’s reporting obligation cannot prompt intervention affecting the independence of MNB decision-makers;

- the MNB will be entrusted with macro-prudential regulations, namely the duty of uncovering business and economic risks threatening the financial intermediary system as a whole in order to prevent these risks and alleviate or eliminate them once they emerge.

- the economic minister will inform the MNB of the draft of the of the central budget not in advance but right after the government’s approval of it;

- a rule limiting the salaries of MNB employees to those of the bank’s vice-presidents is omitted;

- the MNB’s founding charter must be brought into harmony with the Central Bank Act by March 31, 2012.

European Commission Present Jose Manuel Barroso’s requested that the Central Bank Act bill be withdrawn because it is incompatible with European Union legislation. Informal talks between Hungary, the International Monetary Fund and the European Union broke off earlier in December due to the opposition of the IMF and the EU to the Central Bank Act and Financial Stability Act bills.

On Thursday the European Central Bank voiced its concerns regarding an updated version of the bill.

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