Proposed amendment to financial legislation would give additional tools to the central bank and to financial market regulator PSZÁF to intervene before risks build up and thereby prevent a crisis to develop, PSZÁF president Ádám Farkas told MTI.
The government is expected to discuss the amendments at a cabinet meeting next week, Finance Ministry spokesman Ferenc Pichler told MTI on Monday.
Farkas told MTI late on Monday the amendments would strengthen PSZÁF's position as well as the status of the central bank. PSZÁF - at present a government agency - would answer directly to Parliament under the proposed amendments, being transformed into an institution similar to the Competition Office (GVH), he explained.
PSZÁF would have the power to issue decrees in well-defined fields in order to set compulsory rules in order to prevent and manage risks of various financial sectors, Farkas said. Additionally, the National Bank of Hungary (NBH) would be given the power to take preemptive temporary measures if they see the start of trends that could endanger the stability of the financial system, he added.
To create more efficient cooperation among the various institutions responsible for regulation, the amendments would establish a Financial Stability Council, consisting of the finance minister, the head of PSZÁF and the central bank governor as well as three other members, Farkas said. The body would meet regularly to observe financial market trends.
The central bank could propose legislative changes related to the operation of the financial system independently, while PSZÁF could make such proposals through the council, he added. Such proposals could be made publicly, and the institution in charge of drafting legislation should either take action to carry out the proposed changes or should explain if it deems them untimely or bad.
PSZÁF received the MNB's proposal on regulations regarding foreign currency based retail lending, Farkas said. The regulator agrees that there is a need to regulate the field but it has yet to study the proposal before taking a stand, he said. (MTI-ECONEWS)