The programs the ECB was referring to are real estate investment purchases, a program to promote literacy through a network of six foundations, the transfer of MNB staff previously employed by the Hungarian Financial Supervisory Authority and a program to purchase Hungarian artworks and cultural properties, according to the report. Concerns regarding these programs had already been raised in the ECB’s 2014 report and it said that these the issues surrounding these programs have yet to be resolved.
The ECB added that it is monitoring the MNB to “ensure that the central bank resources that it conferred on its network of foundations are not used, directly or indirectly, for state financing purposes”.
The ECB also questioned the MNB’s majority ownership of the Budapest Stock Exchange which it said “may be seen as giving rise to monetary financing concerns as the MNB effectively used central bank resources to support an economic policy goal that is typically seen as a government competence”.
Providing incentives for banks to buy forint-denominated government securities in order to support the MNB’s self-financing program “could be seen as a means of circumventing the prohibition of privileged access under Article 124 of the Treaty”, the ECB added in its report. Article 124 of the Treaty of Lisbon prohibits “any measure, not based on prudential considerations” that establishes privileged access by bodies governed by public law to financial institutions.
The ECB asked in its report that the MNB review its operations and in future make all necessary attempts to avoid conflicts between its practices and monetary financing and privileged access prohibitions.
Producing journalism that is worthy of the name is a costly business. For over 30 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.
