EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 6 December 2006  
at the request of the Hungarian Ministry of Finance 
on a draft law amending Law LVIII of 2001 on Magyar Nemzeti Bank  
and Law XI of 1987 on legislation 
(CON/2006/55) 
 
Introduction and legal basis  
On 20 October 2006 the European Central Bank (ECB) received a request from the Hungarian Ministry 
of Finance for an opinion on a draft law ame nding Law LVIII of 2001 on Magyar Nemzeti Bank 
(hereinafter the ‘MNB Law’) and Law XI of 1987 on legislation (hereinafter the ‘draft law’). 
The ECB has received two versions, ‘A’ and ‘B’, of the draft law attached to the consultation request. 
According to the Ministry of Finance, the Government  has decided to submit only version ‘A’ of the draft 
law to the Parliament for adoption, once it has rece ived the ECB’s opinion. As a result, the ECB has 
examined version ‘A’ of the draft law and this version of the draft law is the basis for the ECB’s opinion. 
The ECB’s competence to deliver an  opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the second and third indent of  Article 2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Ce ntral Bank by national authorities regarding draft 
legislative provisions1, as the draft law relates to means of payment and 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 aims to:  (i)  address some of the issues raised in the ECB’s 2004 Convergence Report concerning Hungary and 
its legislation on MNB; and 
(ii)  amend the rules on banknotes, coins and imita tions thereof, including certain new rights and 
obligations concerning the fight  against counterfeiting; and 
                                                 
1  OJ L 189, 3.7.1998, p. 42.  
2 (iii)  update certain other provisions related to  changes in the Hungarian financial market’s 
arrangements. 
 2. General observations  2.1 The ECB welcomes the draft law, as it will improve  the compatibility of Hungary’s legislation with 
the Treaty and update the MNB Law in the light of  certain changes in the Hungarian financial 
market. 
2.2 According to the consultation request, the draft law ‘strives to take into consideration fully the 
recommendations concerning MNB’s institutional and personal independence in the Convergence 
Report of the European Commission and the Europ ean Central Bank in 2004’. The ECB would like 
to point out that although it is of crucial importa nce for Hungarian legislation to comply with the 
Treaty regarding a national central bank’s institu tional and personal indepe ndence, the ECB’s 2004 
Convergence Report highlighted several other issues th at have not been addressed by the draft law, 
such as – with respect to the integration of the MN B into the Eurosystem – the failure to recognise 
the ECB’s powers in the field of monetary polic y or the ECB’s exclusive right to authorise the 
issue of banknotes within the Community. The ECB also notes that the ECB 2006 Convergence 
Report is currently under preparation and would recommend that any future amendment to the 
MNB Law should take the ECB’s 2006 Convergence Report’s assessment into account. 
2.3  In view of the fact that the MNB Law has b een amended several times in the last few years, the 
ECB would also like to stress the importance of lega l certainty. It is in this regard essential for 
fundamental legislation regulating the central ba nk to serve as clear and constant guidance, and 
overly frequent changes to the central bank legislation may compromise this function.  
 3. Specific observations 3.1 MNB’s independence 
3.1.1  Currently MNB is obliged to obtain the Ministry of Justice’s opinion ex ante  on MNB’s basic tasks. 
The ECB’s 2004 Convergence Report found that this obligation is incompatible with the Treaty’s 
principle of central bank independence. Article 11( 3) and Article 15 of the draft law deletes such 
obligation, stating that ‘the opinion of the Mini ster of Justice does not need to be requested 
concerning the regulations issued by MNB’s Go vernor’. The ECB welcomes this change, as it 
further strengthens MNB’s institutional independence. 
3.1.2
 Concerning the personal independence of members of the Monetary Council and MNB officials, 
the ECB notes that Article 9(1) of the draft law de letes the reference to the intentional failure to 
submit a wealth declaration and the intentional disclos ure of false data or information in the wealth 
declaration as a ground for dismissal in the case of the Governor and the Monetary Council 
members. In this regard, the ECB would like to  emphasise that, although making the Governor, the 
3 Deputy Governor and members of the Monetary Council, as well as members of the Supervisory 
Board subject to a requirement to submit a wealth declaration is in principle acceptable, the application of these provisions must take full account  of Article 108 of the Treaty and 14.2 of the 
Statute of the European System of Central Banks and of the European Central Bank. Furthermore, 
with regard to the inability of a member of th e Monetary Council to fulf il the conditions required 
for the performance of their duties as a ground for di smissal, the ECB is of the opinion that the 
distinction between reasons ‘beyond their control’  and ‘within their control’ in Article 49(10)(a) 
and (b) should be removed, since NCBs’ stat utes should not specify the grounds for dismissal 
beyond those laid down in Article 14.2 of the Statute. 
3.2 Banknotes, coins and imitations  
3.2.1 The ECB understands that the draft law does not prejudice the application of Council Regulation 
(EC) No 1338/2001 of 28 June 2001 laying down measures necessary for the protection of the euro 
against counterfeiting
2. 
3.2.2 With respect to the legal integration of th e MNB into the Eurosystem, the ECB recommends that 
Article 5 of the draft law, which aims to amend Article 31 of the MNB Law, should refer to Article 
106 of the Treaty and Article 16 of the Statute. 
3.2.3 The ECB also notes that the draft law seems to  implement certain provisions of Council Regulation 
(EC) No 974/98 of 3 May 1998 on the introduction of the euro3 and Council Regulation (EC) 
No 2182/2004 of 6 December 2004 concerning me dals and tokens similar to euro coins4, which are 
directly applicable Community law. The concept of direct applicability signifies that regulations and other directly applicable rules of Community law are taken to be part of the national legal 
systems automatically without th e need for separate national legal measures and, according to the 
Court of Justice of the European Communities, Member States should not pass any measure which 
purports to transform a Community regulation or any other directly applicable Community rules into national law
5. 
3.3 Other issues  
3.3.1 The ECB notes that in spelling the name of the single currency as ‘euró’, the draft law does not 
comply with the spelling rules for the word ‘e uro’. To make the euro’s singleness apparent, 
Community law6 requires a single spelling of the word ‘euro’ in the nominative singular case in all 
                                                 
2  OJ L 181, 4.7.2001, p. 6. 
3  OJ L 139, 11.5.1998, p. 1. 
4  OJ L 373, 21.12.2004, p. 1, extended to  the non-participating Member States by Council Regulation (EC) No 2183/2004 
of 6 December 2004 (OJ L 373, 21.12.2004, p. 7). 
5  Case 34/73 Variola  v Amministrazione italiana della Finanze  [1973] ECR 981. 
6  See Council Regulation (EC) No 1103/97 of 17 June 1997 on ce rtain provisions relating to the introduction of the euro 
(OJ L 162, 19.6.1997, p. 1), Council Regulation (EC) No  974/98 of 3 May 1998 on the introduction of the euro 
(OJ L 139, 11.5.1998, p. 1) and Council Regulation (EC) No 2866/98 of 31 December 1998 on the conversion rates 
between the euro and the currencies of the Member States adopting the euro (OJ L 359 31.12.1998, p. 1), all three of 
which were amended in 2000 for the introduction of the euro  in Greece. See also the Co mmunity legislation on euro 
coins in 1998 and 1999, as well as Council Regula tion (EC) No 2169/2005 of 21 December 2005 amending 
Regulation (EC) No 974/98 on the introduction of the euro (OJ L 346, 29.12.2005, p. 1). 
4 Community and national legislative provisions. On the basis of these considerations, and in view of 
the Community’s exclusive competence to dete rmine the name of the single currency, any 
deviations from this rule are incompatible  with the Treaty and should be corrected. 
3.3.2 With respect to the legal integration of the MNB into the Eurosystem, Articles 1 and 11 of the draft 
law which will amend Article 10(1) of the MN B Law and Article 60(1)(c) of the MNB Law 
respectively, fail to recognise the ECB’s powers under Article 19 of the Statute and therefore do 
not remove the incompatibility with Community la w. To address such incompatibility, the ECB 
recommends that the above articles of the draft law refer to the ECB’s powers as specified in Article 19 of the Statute. 
3.3.3 The ECB suggests that Article 15 of the draft law should refer to the duty to consult with the ECB 
in its fields of competence pursu ant to Article 105(4) of the Treaty and Article 4 of the Statute. 
Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by 
national authorities regarding draft legislative provisions
7 expressly requires Member States to take 
the measures necessary to ensure co mpliance with this obligation. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 6 December 2006. 
 
[signed] 
 
The Vice-President of the ECB 
Lucas PAPADEMOS 
                                                 
7  OJ L 189, 3.7.1998, p. 42.