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OPINION OF THE EUROPEAN CENTRAL BANK 
of 31 May 2012 
on the Law on the Magyar Nemzeti Bank 
(CON/2012/43) 
 Introduction and legal basis
 
On 18 May 2012, the European Central Bank (ECB) r eceived a request from the Hungarian Ministry for 
the National Economy for an opinion on an amended ve rsion of a draft law (hereinafter the ‘amended 
draft law’) introducing changes to Law CCVIII of 2 011 on the Magyar Nemzeti Bank (hereinafter the 
‘MNB Law’)1. The ECB has previously expressed its views on an earlier version of the draft law in 
Opinion CON/2012/26. 
The ECB’s competence to deliver an  opinion is based on Articles 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 Ce ntral Bank by national authorities regarding draft 
legislative provisions2, as the amended draft law relates 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 amended draft law The amended draft law differs from its earlier version, on which the ECB commented in Opinion 
CON/2012/26, and it introduces several additional amendments to the MNB Law. 
With regard to the rules for dismissal of Moneta ry Council members, the amended draft law introduces 
changes to Article 46(10) of the MNB Law, instead of repealing it, as was the case in the earlier version 
of the amendments. The two explicit grounds for dismis sal of the members of the Monetary Council are 
now replaced by a reference to Article 14.2 of the St atute of the European System of Central Banks and 
of the European Central Bank (hereinafter the ‘Statu te of the ESCB’). Related amendments to Articles 
46(12), 47(5) and 47(6) further speci fy the procedure for dismissal of the members of the Monetary 
Council members. Article 77 of the MNB Law introdu ces changes to the title of the Labour Court which 
is referred to in Articles 46(12) and 47(5) of the MNB Law
3. Article 77 of the MNB Law has also been 
                                                 
1  Magyar Közlöny , 2011/166., 30.12.2011, p. 41648. 
2 OJ L 189, 3.7.1998, p. 42. 
3  With effect from 1 January 2013 the Labour Court shall be called ‘Adminis trative and Labour Court’. 
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2 amended by the addition of explic it references to Article 14.2 of the Statute of the ESCB and the 
jurisdiction of the Court of Justice of the European Union.  
The amended draft law is unchanged regarding the repeal of Article 34 and Article 46(17) of the MNB 
Law. Article 34 contains the MNB’s obligation to su bmit the agendas for Monetary Council meetings to 
the Government and the right of the Government’s representative to be present at Monetary Council 
meetings. Article 46(17) provides for the abolition of  the Monetary Council when Hungary adopts the 
euro. 
The amended draft law no longer contains a repeal of Article 30 of the Transitional Provisions to 
Hungary’s Fundamental Law, which had allowed for the possibility of a merger of the MNB and the 
Hungarian Financial Supervisory Authority. The ECB understands that the provision repealing Article 30 
of the Transitional Provisions to H ungary’s Fundamental Law has been carved out in a stand-alone bill, 
which will be voted on by Parliament at the same time as the amended draft law. 
 2.  General observations The ECB welcomes the fact that the Hungarian au thorities have taken into account the ECB’s earlier 
observations in Opinion CON/2012/26 regarding Article  46(10) of the MNB Law, thereby strengthening 
legal certainty with respect to the grounds for dism issal of Monetary Council members. However, the 
amended draft law still fails to address a number of  previously highlighted concerns as regards the 
MNB’s independence. Therefore, the ECB maintains its view that the provisions of the current MNB Law 
do not go far enough to re-establish central bank indepe ndence, notwithstanding this move in the right 
direction, as provided by the amended draft law.  
The frequency of amendments to the MNB Law has been criticised in previous ECB Opinions, as it 
contributes to an unstable basis for the operation of the MNB. Against this background, the ECB 
emphasises its preference for addressing the remain ing open issues on the MNB’s independence listed 
below as part of the present pa rliamentary procedure on the MNB La w amendments in order to avoid 
making further amendments at a later stage. 
 3.  Possibility to vary the number of Monetary Council members; appointment of a third Deputy 
Governor 
The concerns expressed in Opinions CON/2011/104, CON/2011/106 and CON/2012/26 on the 
composition of the MNB’s decision-making bodies are still valid. In particular, it is of concern that the 
number of Monetary Council members can be varied, and a third Deputy Governor can be appointed, and 
that such steps can be taken without consulting the MNB and considering its needs, or without providing 
reasonable arguments to support an expansion against the MNB’s advice. This situation gives rise to 
concerns as to whether these provisions could be u sed to influence decision-making processes, to the 
detriment of central bank independence. 
 
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3 4.  Executive powers of the Monetary Council  
The fact that the Monetary Council has a mandate on policy implementation and the day-to-day running 
of the MNB also raises concerns. Such a mandate allo ws for the Monetary Counc il to be responsible not 
only for setting policies, but also for (a) their implem entation, and (b) the overs ight of its own actions. 
These concerns are exacerbated by the fact that diff erent standards apply to the employment and other 
legal relationships of executive and non-ex ecutive members of the Monetary Council. 
 5.  Remuneration of the MNB’s decision-making bodies The ECB remains concerned about the frequent cha nges to the remuneration of the members of the 
MNB’s decision-making bodies. Such changes have been  made without the MNB’s prior consultation and 
with disregard for its views. This conduct amounts to pressure on the members of the MNB’s decision-
making bodies by the national authorities
4. The ECB repeats its view that, in its present form, Article 51 
of the MNB Law should only apply for future appoint ments following prior consideration of the MNB’s 
views.  
 6. Other outstanding concerns related to the MNB Law  
6.1 Grounds for dismissal of the members of the Monetary Council  
The MNB Law provides for a unique two-step dismis sal procedure of the members of the Monetary 
Council. The first step involves notifying the person  concerned about a proposal for his dismissal. 
The decision to make a proposal for a dismissal is  taken by the Parliament’s competent committee 
with regard to the external members of the M onetary Council, and by the Prime Minister with 
regard to the Governor and other Monetary Council members. This proposal for dismissal is subject 
to judicial review under national law. In the sec ond step, the proposal for dismissal can only be 
submitted to the President of Hungary if no action for domestic judicial review has been filed or 
following the final ruling of the Labour Court. Th e amended draft law specifies that the right to 
appeal to the Labour Court does not prejudice the right to appeal to the Court of Justice as specified in Article 14.2 of the Statute of the ESCB.  
The ECB welcomes the reference to  Article 14.2 of the Statute of the ESCB which stipulates that 
governors of national central banks who have been  dismissed from office may refer such a decision 
to the Court of Justice. National legislation should either refer to the Statute of the ESCB or remain 
silent on the right to refer such a decision to the C ourt of Justice as Article 14.2 of the Statute of the 
ESCB is directly applicable
5. Consequently, the decision of the Pr esident of Hungary to dismiss the 
Governor is open for review by the Court of Ju stice which has exclusive jurisdiction as regards a 
decision to relieve a governor from office. At the same time, to ensure c ontinuity of the MNB’s 
                                                 
4  See, for example, paragraph 4.3 of  Opinion CON/2010/56, paragraph 8 of Op inion CON/2011/104, and paragraph 4.3 of 
Opinion CON/2011/106. 
5  See Section 2.2.3 of the ECB’s Convergence Reports May 2010 and May 2012. 
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4 operations, it is advisable that the amended draf t law should provide for consultation with the 
MNB’s Executive Board by the Prime Minister befo re the initiation of a dismissal procedure for the 
MNB Governor.  Furthermore, the ECB understands th at the amended draft law intends to limit the 
President’s power to dismiss the MNB Governor wh ere the Labour Court has ruled in favour of the 
proposal for dismissal. However, in  order to remove the scope for di fferent interpretations, the legal 
drafting of this provision could be improved. 
6.2 Replacement of the Governor 
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 latte r’s absence. The MNB La w 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 func tioning of the Monetary 
Council6.  
6.3 Other remaining issues are specified in the ECB’s Convergence Reports and concern, inter alia , the 
oath taken by the MNB’s Governor and Deputy G overnors, the single spelling of the euro in 
several Hungarian legal acts and the requirement s for legal integration of the MNB into the 
Eurosystem7. Previous ECB Opinions have already poi nted out that the recast of the MNB Law 
offered the Hungarian authorities the opportunity to  make the necessary adjustments to ensure the 
MNB’s full integration into the Eurosy stem when Hungary adopts the euro.  
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 31 May 2012. 
 
[signed] 
 
The Vice-President of the ECB 
Vítor CONSTÂNCIO  
                                                 
6  See paragraph 3.2 of Opinion CON/2010/91. 
7  The ECB’s Convergence Reports are available on the website of the ECB under www.ecb.europa.eu.