The government will amend the Central Bank Law and expand the powers of the multinational bank's supervisory board. When the Ministry of Finance sent the draft amendment to the European Central Bank, Giorgi Matulsi actually declared that the change violated the independence of the central bank.
National Economy Minister Marton Nagy said on Tuesday morning that he did not wish to comment on the relationship between Gyorgy Matulsi and Viktor Orbán. At the same time, “the amendment to the Central Bank Law has nothing to do with the independence of the multinational national bank.”
“Confusion”, that the independence of the central bank would be threatened by the expansion of powers, and that the supervisory body does not supervise monetary policy, but rather the legal economy. The government may consider the amendment during its meeting on Wednesday.
Interestingly, Viktor Orbán also spoke on this topic earlier: In the Prime Minister’s opinion, the independence of the Central Bank is sacred and cannot be compromised. Then he added:The government has not yet discussed amending the law related to the powers of the National Bank Supervisory Authority.”
Previously, Finance Minister Mihaly Varga also explained his position in detail: “The Central Bank is now performing many tasks that do not belong to the core tasks of monetary policy.“. According to him, the foundations are also like that.
MNB “remains a believer in full transparency”
After Marton Nagy's words, we didn't have to wait long The official reaction of the central bank. In their statement issued on Tuesday, they stated that, based on its legal obligations, Magyar Nemzeti Bank seeks to contribute to the national economic interests of Hungary through responsible management of monetary policy and by supporting an efficient and predictable financial system that ensures sustainable growth of the Hungarian economy. Economy. Then they added
In all cases, the multinational bank takes its decisions in accordance with the external and internal rules that determine the central bank’s work system, in addition to the principles of independence and responsibility.
The Multinational Bank has studied in detail the impact of the draft sent by the Ministry of Finance to the European Central Bank for an opinion on the independence of the Multinational Bank, paying particular attention to the section on amending the provisions relating to the Supervisory Board.
According to the Central Bank, and on the basis of the draft, when making decisions regarding other tasks of the multinational bank established by law, decisions involving expenditures exceeding the amount specified in the founding document will require prior authorization from the supervisory board of the multinational bank, providing the opportunity to reduce The independence of the central bank is as follows:
- Prior approval would grant administrative powers to the supervisory board that exercises ownership control, i.e. by limiting the powers of the management board.
- It would increase the possibility of a difference of opinion between the Management Board and the Supervisory Board regarding certain tasks, which would hinder the Board of Directors' decision-making.
- In the case of decisions subject to prior approval, the determination of the value limit by the shareholder in the incorporation deed may make the scope of questions requiring the prior opinion of the Supervisory Board in relation to other tasks unlimited.
The Central Bank also stated in its announcement that based on the above aspects, the draft raises concerns, because – although it appears related to other tasks – it can be considered as something that may be relevant for the Board of Directors of the multinational bank. Perform other tasks related to the independence of MNB that influence and impede the decision-making process.
Since the ECB is represented uniformly and consistently in its convergence reports, this effect can be seen as a restriction of the independence of the central bank, since the Treaty on the Functioning of the European Union requires member state governments to respect the principle of centralization. Bank independence, and that national central banks should not attempt to influence the decision-making process by influencing members of their bodies in performing their duties.
It was then stated that, depending on the project, the Supervisory Board would also be expressly authorized, directly or indirectly, through the internal audit organization of the multinational bank, to monitor the economic companies (subsidiaries) that own the majority in the multinational bank, and the institutions established by the bank multinational. MNB, and the institutions established by MNB, have the majority control over existing economic companies, within the framework of ownership control. According to them:
- Since the majority-holding companies of the multinational bank already have a supervisory board, and the State Audit Office also carries out regular inspections, expanding the tasks and powers of the supervisory board of the multinational bank in this way is not only unjustified, but may also be unjustified. It also raises concerns about the parallel operation of the two supervisory boards.
- The central bank also stated that the ECB's position statement states that the supervisory board cannot control activities related to the core tasks of the multinational bank. As a result, the Supervisory Board will not have the right to control the activities of companies in which the multinational has a majority stake, and whose activities directly or indirectly affect the core tasks of the multinational bank, or their impact on the results of the multinational bank.
It was then emphasized that: Considering that all concerned organizations have fulfilled all their legal obligations, their supervisory board reviews them continuously, and the Audit Bureau makes a decision from it. “The current draft of the Central Bank Law – although it appears to relate to other tasks – is only appropriate to influence the decision-making process of the Board of Directors of a multinational bank with regard to core tasks or other decisions that fall within the scope of the independence of the multinational bank. And also That the Supervisory Board acquires management rights in addition to its previous supervisory powers” - their summary.
Finally, they conclude their declaration as follows: “The National Multinational Bank has always fully complied with its obligations regarding the provision of information and data in accordance with legal requirements and remains a believer in full transparency, but at the same time rejects any efforts that may be appropriate to limit the independence of the Central Bank.”
(Cover photo: György Matolksi, President of Magyar Nemzeti Bank on July 6, 2021. Photo: Szilárd Koszticsák / MTI)
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