EN ECB -PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 28 June 2012  
on the Magyar Nemzeti Bank  
(CON/201 2/49) 
 
Introduction and legal basis  
On 20 June 2012, the European Central Bank (ECB) received a request from the Hungarian Ministry for 
the National Economy for an opin ion on a new  draft law (hereinafter the ‘draft law ’) introducing changes 
to Law CCVIII of 2011 on the Magyar Nemzeti Bank  (hereinafter the ‘MNB Law’)1. Previous  ECB 
Opinions considered  earlier version s of the draft law , now withdrawn from the Parliament2.  
The ECB’s competence to deliver an opinion is based on Article s 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third indent of Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions3, as the draft law  relate s to the Magyar Nemzeti Bank ( MNB ). In accordance with 
the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 
1.  Purpose of the draft law  
The draft law  introduces additional  amendments to the MNB Law compared to the  previous draft  
legislation on which the  ECB commented in Opinion  CON/2012/43.  
The draft law amends Article 4 6(1) of the MNB Law to better delineate the division of responsibilities 
between the Monetary Council , which will focus strictly on policy formulation and related oversight  
activities, and the Executive Board, which will be solely responsible for policy im plementation.  
The draft law limits the possible combinations of the number of executive and non- executive members of 
the Monetary Council , by specifying in Article 46(3) that the number of non- executive members should 
be higher than the number of executive members , but by less than a two- to-one ratio.  
With regard to the rules for dismissal of Monetary Council members, the draft law  carries over verbatim 
from the previous draft legislation
4 the changes to Articles  46(10) , 46(12), 47(5), 47(6), 77(1) and 77( 2) 
                                                 
1  Magyar Közlöny , 2011/166., 30.12.2011, p. 41648.  
2  Opinions CON/2012/26 and CON/2012/43.  All ECB Opinions and Convergence Reports are available on the ECB’s 
website at www.ecb.europa.eu.  
3 OJ L 189, 3.7.199 8, p. 42.  
4  See ECB Opinion CON/2012/43.  
ECB -PUBLIC  
2 of the MNB Law . These amendments clarify the procedure for dismissal of members of the Monetary 
Council and align it with Article 14.2 of the Statute of the European System of Central Banks and of the 
European Central Bank (hereinafter the ‘ Statute  of the ESCB’ ). The draft law further improves the 
wording of Article 47(6)  by stipulating that a  proposal for dismissal of the MNB Governor first  requires a 
final ruling by  the Labour Court that the conditions for dismissal specified in Article 14.2 of the Sta tute of 
the ESCB are met . In addition, the draft law aligns  the wording  of Article 46(13) , regulat ing the 
circumstances under which the other members of the Monetary Council can be removed from office, with 
the new w ording of Article 47(6).  
The draft law  carries over from the previous draft amendment law, on which the ECB commented in 
Opinion CON/2012/43, the repeal of Article 34 and Article 46(17) of the MNB Law. These amendments 
remove the MNB’s obligation to submit the agendas for Monetary Council meetings to the Government 
and the right of the Government’s representative to be present at Monetary Council meetings, as well  as 
the abolition of the Monetary Council when Hungary adopts the euro.  
Finally, the draft law inserts  a new Article 36(5) in the MNB L aw to limit in time the disclosure of  non-
classified data related to the management of gold and foreign exchange reserves for up to 10 years. 
Within this period the MNB Governor decides on the disclosure of such data . 
Since the adoption of CON/2012/43, Article 30 of the Transitional Provisions to Hungary’s Constitution - 
which had allowed for the possibility of a merger of the MNB with the Hungarian Financial Supervisory 
Authority  - has been repealed through a separate amend ment to the  Constitution . 
 
2.  General observation s 
The draft law addresses the most important remaining concerns regarding the MNB’s independence. The 
ECB notes that this time the MNB was consulted on  the draft law, as required by national legislation5. 
The draft amendments, alongside a commitment6 not to increase the size of the Monetary Council during 
the term of the current MNB Governor , are an indication that the Hungarian G overnment  is now ready  to 
respect the MNB’s institutional independence. The ECB will monitor closely the observa nce in practice 
of central bank independence, and will continue to liaise with  the Hungarian G overnment to address the 
remaining open issues, which were also acknowledged in the consultation letter . 
 3.  Specific observations  
3.1 Distribution of executive power  among MNB decision -making bodies  
 The draft law fully resolves the concerns in ECB Opinion  CON/2012/43.  
                                                 
5  According to Article 32 of the Law on MNB, t he MNB has to be consulted on any  draft legal acts related  its tasks.  
6  The public commitment was made i n letters  on 18 June 2012 - referenced in the letter con sulting the  ECB - by Prime 
Minister Mr Orban to C ommission  President Mr Barroso and by the Chair  of the Parliamentary Committee on Economic 
and Information Technologies Mr Rogan to C ommission  Vice-President Mr Rehn . 
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3 3.2 Possibility to vary the number of Monetary Council members; appointment of a third Deputy 
Governor  
 The MNB governance structure has been chan ged through making the number of non- executive 
members of the Monetary Council larger, but not by a wide margin, than the number of executive  
members . This aims to safeguard  the MNB ’s independence and  in practice limits the ability of the 
Government to var y the number of Monetary Council members . Furthermore, the commitment7 not 
to increase the size of the Monetary Council during the term of the current MNB Governor  
addresses the immediate concern at  the lack of consultation of the MNB on the issue. However , the 
introduction of additional checks and balances in this area is advisable. One possibility is t he 
introduc tion of  a consultation procedure with the G overnor in office before appointing any new 
members to the Monetary Council. This would ensure the nec essary dialog ue between the 
appointing body and the central bank and the consideration of the MNB ’s needs. Another 
possibility is staggering the terms of office  of members of the Monetary Council , which  would 
ensure policy continuity and make it less likel y that all Monetary Council  members are appointed 
by the same G overnment . 
3.3 Rules of dismissal of Monetary Council  members  
 The draft law addresses in a satisfactory manner  the issues of personal independence of the 
members of the MNB’s decision -making b odies related to the rules on their dismissal,  which were 
raised in ECB Opinion s CON/201 2/26 and CON/2012/43. Article 46(13) of the draft law clarifies 
that in the two step dismissal procedure8 provided by the MNB Law , the national court examines 
whether t he conditions for dismissal specified in Article 14.2 of the Statute of the ESCB are met 
and the decision to make a proposal for a dismissal can only be taken by the Parliament’s 
competent committee with regard to the external members of the Monetary Counc il, and by the 
Prime Minister with regard to the Governor and other Monetary Council members , if the c ourt 
establishes that these conditions are met.  
The ECB understands  that the express r eference in Article 47(5) of the MNB Law to Article 14.2 of 
the Sta tute of the ESCB clarifies that , in the event of a decision to dismiss the MNB G overnor, the 
Governor  may refer the decision to the Court of Justice irrespective of having sought  remedy at the 
national court  against the motion for dismissal .  
3.4 Remunerat ion of the MNB’s decision- making bodies  
 The ECB remains concerned about the  frequen t changes to the remuneration of the members of the 
MNB’s  decision -making bodies . Such earlier changes ha d been made without the MNB’s prior 
                                                 
7  See footnote 5.  
8  As specified in paragrap h 6.1 of CON/2012/43, the first step involves notifying the person concerned about a proposal for 
dismissal. The  proposal for dismissal is subject to judicial review under national law. The proposal for dismissal can only 
be submitted to the Parliament, or  in respect of the Governor and Deputy Governors to Hungary’s  President if no action 
for domestic judicial review has been filed or following the final ruling of the Labour Court. The second step is a  
decision to dismiss the Governor  and Deputy Governors b y Hungary’s  President, and for other members of the Monetary 
Council, by the Parliament .  
ECB -PUBLIC  
4 consultation and disregard ing its views9. The ECB reiterates its view that, in its present form, 
Article 51 of the MNB Law should only apply for future appointments and subject to prior 
consideration of the MNB’s views.  
3.5 Empowering  the MNB Governor to limit disclosure of data related  to management of gold and 
foreign exchange reserves  
 When Hungary adopts the euro, a safeguard clause should be  inserted  in the newly introduced 
Article 36(5)  on the confidentiality regime for foreign reserve management  to prevent  
infringements of specifi c confidentiality obligations towards the ECB and the E uropean System of 
Central B anks in the area of foreign reserves management . 
 
4. Other outstanding  concerns related to the MNB  Law  
The ECB reiterates its observation from  Opinion CON/2010/91 related to the replacement of the MNB’s 
Governor. Pursuant to Article 47(8) of the  MNB  Law, the Deputy Chair of the Monetary Council may 
replace the Governor in the latter’s absence. The MNB Law needs to provide sufficient guarantees and 
rules for a successor to the Governor in the event of termination of office due to expiry of the term of 
office, resignation, dismissal or death to avoid any external ad hoc interference and at the same time to 
ensure the smooth and continuous functioning of the Monetary Council10.  
Other issues concern, inter alia , the oath taken by the MNB’s Governor and Deputy Governors  and the 
single spelling of the euro in several Hungarian legal acts. Previous ECB Opinions and Convergence Reports have also pointed out the requirements for the MNB’ s legal integration into the Eurosystem
11 and 
that the recast of the MNB Law offered the Hungarian authorities the opportunity to me et those 
requirements . 
 
This opinion will be published on the ECB’s website.  
  
Done at Frankfurt am Main, 28 June 2012.  
 
[signed]  
 
The Vice -President of the ECB  
Vítor  CONST ÂNCIO  
                                                 
9 See, for example , paragraph 3.3 of Opinion CON/2010/56, paragraph 8 of Opinion CON/2011/104 and paragraph 4.3 of 
Opinion CON/2011/106.  
10  See paragraph 3.2 of Opini on CON/2010/91.  
11  See, for example,  ECB Convergence Report  2012, p. 58 .