EN  ECB-PUBLIC 
 
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 31 January 2014  
on the Magyar Nemzeti Bank 
(CON/2014/8) 
 
Introduction and legal basis  
On 3 January 2014, the European Central Bank (ECB) received a request from the Hungarian Ministry of 
National Economy (hereinafter the ‘consulting author ity’) for an opinion on a draft law amending the 
Law on the Magyar Nemzeti Bank1 (hereinafter the ‘draft law on the Magyar Nemzeti Bank’), and a draft 
law on fiduciary asset managers and the rules governi ng their activities (hereinafter the ‘draft law on 
fiduciary asset management’). 
On 9 January 2014, the ECB received an additional re quest for consultation from the consulting authority 
on a draft law amending several legal acts, including the Law on the Magyar Nemzeti Bank, as regards the rules applicable for the declaration of wealth by certain officials of the Magyar Nemzeti Bank (MNB) 
(hereinafter the ‘draft law on declaration of wealth ’). As this consultation request also concerns an 
amendment of the Law on the Magyar Nemzeti Bank, the ECB has decided to merge the two consultation 
requests and adopt one opinion concerning all of the draft provisions sent for consultation. 
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 inde nt 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 provisions
2, as the draft laws concern rules applicable  to the central bank. In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Purpose of the draft laws 1.1 Pursuant to the Law on the Magyar Nemzeti Bank,  the Hungarian Financial Supervisory Authority 
(HFSA) was dissolved and its functions and r esponsibilities were transferred to the MNB on 
1 October 2013. From this date, the MNB becam e the entity not only responsible for macro-
prudential policy, but also for micro-prudential s upervision of the entire financial market. As a 
result, the MNB has been exclusivel y authorised to take administrative decisions pertaining to the 
prudential supervision of the financial markets since that date. According to the explanatory 
                                                            
1  Law CXXXIX of 2013 on the Magyar Nemzeti Bank. 
2  OJ L 189, 3.7.1998, p. 42. 
ECB-PUBLIC  
2 memorandum attached to the draft law amendi ng the Law on the Magyar Nemzeti Bank, an 
amendment of the recently adopted Law on the Ma gyar Nemzeti Bank has b ecome necessary with 
respect to: (a) improving the Law on the Magyar Nemzeti Bank based on practical experience recently gained from applying its provisions in co nnection with the MNB’s financial supervisory 
tasks; (b) providing greater flexibility in the Financial Stability Council’s (FSC) decision-making procedure; and (c) ensuring more efficient enforc ement of the payment of the MNB’s supervisory 
revenues. To this end, the draft law amending the Law on the Magyar Nemzeti Bank provides that 
the adoption of certain decisions under FSC ad ministrative procedures may be delegated to 
competent MNB managers. It also provides for (a) the National Tax and Customs Administration of Hungary  to collect unpaid supervisory fees and fines im posed by the MNB for and on behalf of the 
MNB; (b) the MNB’s Governor or the person designa ted by him to become a member of the Board 
of the Public Procurement Authority; (c) the MNB to become the sole owner of the Credit 
Institution Liquidator Non-profit LLC; (d) the ame ndment of the provisions applicable to legal 
remedies against the MNB’s administrative deci sions; and (e) the possibility for the MNB to 
provide payment services for its employees, limite d to cash payments, from their accounts managed 
by the MNB. 
1.2 The draft law on fiduciary asset management regulates the legal status and activities of fiduciary 
asset managers. According to an amending proposal th at is to be submitted to this draft law during 
the Hungarian parliamentary procedure, the MN B, as the Hungarian financial supervisory 
authority, is to be given authority to grant li cences to entities carrying out such activities as well as 
to keep records with re gard to such entities. 
1.3 The draft law on the declaration of wealth defi nes sanctions against the MNB’s Governor, the 
Deputy Governors, the other Members of the Monetary Council and the members of the Supervisory Board if: (a) they refuse or fail to submit their declaration of wealth by the given 
deadline; or (b) they intentionally include s ubstantively false data in their declaration. 
 2. Specific Observations 2.1 The Law on the Magyar Nemzeti Bank has been subject to frequent changes over recent years, 
which also resulted in it having been recast twi ce since 2010. The currently applicable Law on the 
Magyar Nemzeti Bank only took effect on 1 October 2013, and it is already subject to change. The 
frequency of amendments to the Law on the Magy ar Nemzeti Bank, which the ECB has criticised 
in its previous opinions
3 and in its Convergence Reports4, creates instability in the MNB’s 
operations. A legal framework that provides a stable  basis for a central bank to function is essential 
for central bank independence. 
                                                            
3  See, for example, Opinions CON/2007/14, C ON2008/83, CON/2010/91, C ON/2011/104, CON/2012/43 and 
CON/2013/56. All ECB opinions are published on the ECB’s website at  www.ecb.europa.eu. 
4  See Chapter 6.6 of the ECB’s Convergence Report 2010, and Chapter 6.5 of the ECB’s Convergence Report 2012. 
ECB-PUBLIC  
3 2.2 The draft amendments summarised in section 1 do  not warrant further observations from the ECB. 
At the same time, the ECB notes that there ar e still outstanding issues concerning the Law on the 
Magyar Nemzeti Bank, which s hould have been addressed in one of the numerous amendments 
described above. Therefore, the Hungarian legislat or should take the opportunity that the current 
legislative process offers to address the issues that  the ECB has already raised in relation to the 
Law on the Magyar Nemzeti Bank in its opinions and in the Convergence Reports referred to in 
paragraph 2.1, including the following issues: 
(a) Additional safeguards should be introduced  into the Law on the Magyar Nemzeti Bank5 in 
relation to the monetary financing prohibition6; the ECB, in its Convergence Report, also 
pointed out other provisions of the Law on the Magyar Nemzeti Bank that are incompatible 
with the provisions of the Statute of the European System of Central Banks and of the European Central Bank (hereinafter the ‘Statute of the ESCB’). 
(b) There should be a provision covering: (i) add itional checks and balances in the procedure for 
appointing Monetary Council members, and the rules providing for the smooth and continuous functioning of the Monetary Counc il in case of termination of office of the 
Governor; and (ii) changing the text of the oath taken by the MNB’s Governor and its 
Deputy Governors
7. 
(c) There should be provisions: (i) as regards the prohibition of monetary fi nancing in relation to 
the MNB’s general succession to the HFSA’s  obligations and pending legal proceedings8; 
and (ii) the MNB defining the financia l contribution of supervised entities9. 
2.3 Article 157 of the Law on the Magyar Nemzet i Bank defines the rules with regard to the 
submission of declaration of wealth by MNB offi cials. The draft law on declaration of wealth, 
which further amends the Law on the Magyar Ne mzeti Bank, provides that: (a) as long as the 
MNB’s Governor, Deputy Governors, members of  the Monetary Council and members of the 
Supervisory Board do not comply with their obligati on to submit a declaration of wealth, they will 
be prohibited from carrying out their duties and, as  a consequence, they will not be entitled to 
receive their remuneration; and (b) a conflict of in terest as defined in Article 152-156 of the Law on 
the Magyar Nemzeti Bank has to be formally estab lished on their behalf, should they fail to fully 
comply with the obligations for submitting a declara tion of wealth or if they submit substantively 
false data or facts. 
2.4 Article 3 of the draft law on declaration of wealth  inserts a new paragraph 1a in Article 157 of the 
Law on the Magyar Nemzeti Bank . The ECB has noted in its Opinion CON/2009/6410 that 
                                                            
5  See Article 12(4) of the Law on the Magyar Nemzeti Bank , which has changed in the draft law without taking into 
account the ECB’s Convergence Report 2012. 
6  See pages 243 to 248 of the ECB’s Convergence report 2012. 
7  See paragraphs 3.2 and 3.3 and paragraph 4 of Opinion CON/2012/49. 
8  See paragraph 3.1.2 of Opinion CON/2013/56. 
9  See paragraph 3.1.5 of Opinion CON/2013/56. 
10  See paragraph 3.3. 
ECB-PUBLIC  
4 sanction s related to non-compliance with the obligation of submitting wealth declarations are not 
generally prohibited, provided that certain safegua rds apply. The sanction provided for in Article 3 
in effect allows the MNB’s Governor, Deputy Governors and the members of the Monetary 
Council to be temporarily11 removed from office for grounds other than those pursuant to Article 
14.2 of the Statute of the ESCB. The ECB would like to underline that Governors and other members of a decision-making body of a national central bank (NCB) who are involved in the performance of ESCB-related tasks may not be dismi ssed for reasons other than those laid down in 
Article 14.2 of the Statute of the ESCB. 
2.5 As regards the establishment of a possible conflict of interest, the insertion of a new paragraph 3 in 
Article 157 of the Law on the Magyar Nemzeti Bank is understood by the ECB to be used to oblige 
the Governor, the Deputy Governors, the member s of the Monetary Council and the members of 
the Supervisory Board of the MNB to submit an accur ate declaration of wealth. As regards this new 
paragraph 3, the ECB notes that the declaration of th e conflict of interest should: (a) clarify whether 
this establishment involves only a presumption that a conflict of interest arises; (b) define the extent of the conflict of interest in such cases; and (c) provide for a legal remedy against such a decision. 
Nevertheless, the ECB notes that in order to dismiss the Governor and other members of any 
NCB’s decision-making bodies who are involved in th e performance of ESCB-re lated tasks, one of 
the two grounds for dismissal specified by Article 14.2 of the Statute of the ESCB have to apply. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 31 January 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                            
11  See the insertion of a new paragraph (1a) to Article 157 of  the Law on MNB allowing for the suspension of the right of 
the members of the Monetary Council of the MNB to exercise their duties.