Govt submits bill on new central bank law

A bill submitted by the government to Parliament on the new central bank act would raise the maximum number of rate-setters on the National Bank of Hungary’s Monetary Council from seven to nine and give the prime minister, rather than the central bank governor, the right to propose deputy governors, whose number would be raised from two to three.

The bill would require the MNB to submit the agenda of its board of directors to the government.

The bill would allow the house speaker or the chairman of Parliament’s economy committee to request extraordinary reports from the central bank governor. At present, only Parliament may call on the governor to report on the central banks’ activities and monetary policy.

The bill would also place caps on the salaries of the central bank governor, deputy governors and staff. The governor’s monthly pay would be limited to ten times the average monthly wage, as calculated by the Central Statistics Office (KSH), in the previous year.

At present, the governor’s salary is capped at HUF 2m a month, the same as for all public sector employees.

The bill would establish the governor’s salary as a benchmark, limiting deputy governors’ remuneration to 70% or 80% of the amount, depending on which deputy governor is deputy chair of the Monetary Council, and capping Monetary Council members’ salaries at 60%.

The new central bank act is necessary because of Hungary’s new constitution, which comes into force from the start of next year. The present central bank act was codified ten years ago.