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Fidesz: bill will strengthen central bank's independence

Hungary's new central bank law will be designed to boost the bank's independence and increase its powers to regulate markets, Fidesz parliamentary group head János Lázár told the news agency Bloomberg in an interview

"The law will strengthen the central bank's independence, against the expectation that it will weaken it. In fact, we want to give the central bank more power," Lázár said. "In cases where the central bank, as an independent institution, sees risks, it should have the tools not only to form an opinion but also to act, possibly to regulate; for example, in the case of risks relating to foreign currency lending," he added.

Fidesz, which came to power in April last year, has criticized the bank for allowing Hungarian households accumulate a huge stock of Swiss franc loans before the 2008 global crisis. A surge of the franc against the forint since 2008 has boosted loan repayments and defaults, and contributes to the weakness of domestic consumption. In the past days the forint hit several record lows against the franc.

The bank's Governor András Simor, who has also been criticized by the government for his personal investments, has resisted calls from Fidesz politicians to quit ahead of the end of his term in 2013. Lázár said the new law would be drafted by November at the latest. "The ouster" of Simor is not on the agenda, he said. He also said that Hungary may retain some form of taxes on energy, financial, telecommunications and retail firms after 2012 when special taxes levied on these firms last year expire.

"The affected industries will continue to have a tax burden, but this shouldn't exceed the European level," Lázár said. "The industry tax is a temporary measure, but politically our aim is that in the future the tax burden shouldn't be more or less than the European average for these industries," he said. He added that this was the view of the Fidesz parliamentary group rather than the government's position.