ECB Clears Proposed Amendment to Hungary Central Bank Act

MNB

Photo by EQRoy / Shutterstock.com

The European Central Bank (ECB) has cleared the government's proposed amendment to the central bank act, Finance Minister Mihály Varga said on Monday, according to a report by state news wire MTI.

"The European Central Bank has approved the government's proposal to amend Hungary's central bank act, the point of which is to recapitalize central bank losses not from tax revenue, but from expected mid-term profits, in line with international practices," Varga said in a post on Facebook.

Parliament could vote on the proposal in the fall, he added.

Legislation in force at present requires the government to cover any difference between the central bank's net assets and statutory share capital in equal payments over five years.

The government signaled its intent to amend the legislation after the MNB estimated its mandatory recapitalization, following expected losses due to economic stimulus and measures to bring down inflation, posed a risk to the 2024 budget equivalent to 0.4%-0.5% of GDP.

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