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Parliament approves PSzÁF-MNB integration

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Parliament yesterday approved legislation that integrates financial supervision into the National Bank of Hungary in the framework of the fifth amendment to the nation's constitution. The government submitted the bill to Parliament in June, but waited for the European Central Bank to issue an opinion on the integration before taking a vote.

The changes give the central bank the consumer protection and market oversight functions of financial market watchdog PSzÁF in addition to oversight of money, capital and insurance markets. The modification comes into force on October 1, with PSzÁF to wind up the same day. “The integration is an underlying condition for following and controlling system-level risks that threaten the stability of the financial system as a whole,” according to the bill's justification.

The European Central Bank (ECB) gave the thumbs-up to the integration in an opinion published in August: “The ECB welcomes the integration of [PSzÁF] into the [MNB], as this integrated institutional framework will improve the [MNB]’s ability to safeguard financial stability and prevent or mitigate systemic risks. In Member States with a relatively small financial market, such as Hungary, there are strong arguments for concentrating supervisory and macro-prudential responsibilities within a single authority.”

The ECB warned, however, that the period between the approval of the legislation and its entry into force on October 1, 2013, was insufficient to accommodate the “serious organizational restructuring” required to take over financial market supervision.

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