Analysts say merger of MNB and PSZAF could increase efficiency, though trouble markets

The proposed amendment to merge the duties and authority of the National Bank of Hungary (MNB) and financial market regulator PSZAF could increase efficiency, though it might also worry markets, analysts told MTI.

Zoltan Torok of Raiffeisen Bank told MTI that the merger of the two institutions could theoretically produce more efficient financial supervisory and management operations, noting that central banks are responsible for the regulations of financial markets in most countries.

Mr Torok cautioned, however, that markets could react negatively to the merger if they suspect that it is aimed at placing a government loyalist at the head of the MNB.

Zsolt Kondrat of MKB Bank remarked that the European Central Bank would disapprove of any measure that infringed upon the authority of MNB Governor Andras Simor, adding that the proposed merger could provide a negative backdrop to u%oming credit-agreement talks between Hungary and the International Monetary Fund and the European Union.

Gyorgy Barcza of K and H Bank said that the merger of the MNB and PSZAF would unlikely produce a change in Hungary’s monetary policy since government-appointed members already constitute a majority within the central bank’s monetary council. Mr Barcza said that the market’s possible concerns with regard to the merger would soon dissipate if it does not entail a change in the MNB monetary policy.

Parliament’s Constitutional Affairs Committee’s announced on Wednesday evening that it would submit an amendment to parliament stipulating the merger of the MNB and PSZAF under a newly established organization. The amendment would furnish the president of the republic with the authority to appoint the president of the new organization, while the governor of the MNB and the chairman of PSZAF would serve as the organization’s vice presidents. The president of the republic would name the organization’s new vice-presidents following the expiration of the mandates of current MNB Governor Andras Simor and PSZAF Chairman Karoly Szasz.