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Government to propose new structure for management of financial regulator in autumn

The government will propose a new management structure with clearly defined responsibilities for Hungarian financial market regulator PSzÁF in the autumn, MTI reported, citing government sources.

The proposal will be made after consultations which will begin soon on ways to improve the efficiency of financial-market oversight with the International Monetary Fund (IMF, the World Bank and the National Bank of Hungary (MNB).

The sources said that the government does not support the elimination of the supervisory council currently heading the Hungarian financial market regulator PSzÁF and replacing it with a director proposed by the Prime Minister and appointed by the President.

Such a change was proposed by Parliament's economic committee early last week, though was rejected by the parliamentary budget committee. According to MTI's information, the economic committee plans to withdraw the proposed amendment on Monday.

PSzÁF supervisory council president István Farkas resigned - as he later said to leave room for a change - last Thursday. Thursday morning the daily Világgazdaság cited a finance ministry working paper that had criticized many aspects of PSzÁF 's operations.

When announcing that the resignation was accepted by Prime Minister Bajnai, the government spokesperson said the prime minister expressed high esteem for the work of Farkas, though added that the organization nevertheless needs a new leader in order to transform its current organization and operations.

Welcoming a decision at Friday's EU summit to establish a European system of financial supervisors Bajnai said Hungary is not waiting for an international structure to be shaped, but would renew control over the banking system through international consultations. Bajnai said the objective is for Hungary's financial supervision to better protect the interests of Hungarian citizens, and in order to do this, the supervisor must engage in preventive actions, not merely take retroactive measures.

There has been no decision whether the restructuring would involve integrating the Hungarian financial market regulator PSzÁF into the National Bank of Hungary (MNB), the Prime Minister Bajnai said on Friday. In late May, PSzÁF, the MNB as well as the Finance Ministry denied press rumors of talks on the possibility of merging of the regulator into the central bank. (MTI – Econews)