EN  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 7 October 2013  
on the integrated Hungarian supervisory framework 
(CON/2013/ 71) 
 
Introduction and legal basis  
On 24 August 2013, the European Central Bank (ECB) received a request from the Hungarian Ministry of 
Nation al Economy (hereinafter the ‘consulting authority’) for an opinion on a new draft law amending 
several legal acts in the area of financial regulation (hereinafter the ‘draft law’) in connection with a Law 
CXXXIX of 2013 on the Magyar Nemzeti Bank1 (hereina fter referred to as the ‘new Law on MNB’) 
facilitating  the integration of the Hungarian Financial Supervisory Authority (HFSA) into the Magyar 
Nemzeti Bank (MNB) . This consultation request is a follow -up to Opinion CON/2013/56 on the  draft law 
replacing  the Law on the Magyar Nemzeti Bank2.  
On 16 September 2013, the ECB received amendments to the draft law from the consulting authority . 
This correspondence  also contained a  further  request for an ECB opinion on a new draft government 
decree (hereinafter the ‘draft decree’) amending several government decrees in connection with the 
integration of the HFSA into the MNB. Given that this request is also directly connected to the new integrated supervisory structure in Hungary, the ECB has decided to issue a joint  opinion on both 
consultation requests.  
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  and sixth indent s of Article 2(1) of Council Decision 
98/415/EC o f 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions
3, as the draft law concerns the MNB  and contains rules applicable to 
financial institutions insofar as they materially influence the stability of financial institutions and markets . 
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 and the draft decree  
The Hungarian Parliament has adopted new legislation  chang ing the MNB’s competence and 
institutional framework by establishing a new legal framework for integrated supervision of the 
                                                           
1  The newly adopted Law CXXXIX of 2013 on the MNB has been published in Magyar Közlöny No. 158/2013, 
(26.9.2013). 
2  Law CCVIII of 2011. 
3  OJ L 189, 3.7.1998, p. 42. 
ECB -PUBLIC 
2 Hungarian financial market  as of 1 October 20134. The purpose of the draft law and the draft decree 
is to implement this change in other related legal acts.  
The H FSA is supervis ing credit institutions , capital markets, insurance markets and financial funds  
until 30 September 2013 . The operational conduct of th ese functions  is further defined in several 
Hungarian legal acts. To this effect, the draft law5 amends 57 Hungarian legal acts and the draft 
decree amends 50 government decrees in the area of financial regulation . Most of the amendments 
contained in the draft law and in the draft decree are of a technical nature, as the aim of these 
legislative changes is to reflect the establishment of  a new integrated supervisory structure in 
Hungary by replacing the references to the H FSA and its competences with a reference to the MNB 
and its new tasks and competences in various legal acts.  Moreover , the draft law repeals certain 
secondary legal acts.  
 
2.  The appropriate time to consult the ECB  
On 24 August 2013, the ECB received the request from the consulting authority for an opinion on 
the draft law. This request was made on an urgent basis with reference to the Hungarian 
Parliament ’s schedule for discussing  the draft law on 9 September 2013.  
On 30 August 2013, the Government submitted a different version of the draft law to the  
Parliament6, but this version was not sent to the ECB. Furthermore, on 16 September  2013, the 
consulting authority requested the ECB’s opinion on amendments made to the draft law. The 
additional request for an opinion on the draft decree similarly stresse d the urgency of a quick 
response from the ECB due to the advanced stage of legislation. In view of the above , this  opinion 
has been adopted in response to the consultation requests , and is  based on the texts submitted to the 
ECB on 24 August and 16 Septem ber 2013.  
The draft law subject to this consultation was adopted on 23 September 2013 shortly after the ECB 
had been consulted on its amendments, but  before it could adopt this  opinion. The draft law was 
published shortly after its adoption as Law CXLIII o f 20137. Similarly, the draft decree was also 
adopted, and published as Government Decree 345/2013 (IX. 30.)8. As a consequence, there was 
no possibility for the Hungarian legislator to take the ECB’s views into account before adopting the 
draft law . This circumstance rendered the request for the ECB adopting its opinion in an urgent 
procedure obsolete.  
                                                           
4  For the ECB’s opinion on this proposal, see Opinion CON/2013/56. All ECB opinions are published on the ECB’s 
website at www.ecb.europa.eu. 
5  Submitted to the ECB under the title ‘Proposal on the amendments of acts concerning the proposal on the Act of Central 
Bank of Hungary’. 
6  Draft law T/12018. egyes törvényeknek a Magyar Nemzeti Bankról szóló törvénnyel összefüggő, valamint egyéb célú 
módosításáról, available at the Hungarian  Parliament’s website.  
7  Published in Magyar Közlöny No. 159/2013 (27.9.2013). 
8  Published in Magyar Közlöny No. 160/2013 (30.9.2013.) 
ECB -PUBLIC 
3 With respect to th e consultation on the draft law  and the draft decree, the Hungarian authorities 
have not complied with their duty to consult the ECB. The  adoption of this opinion in no way 
divests the Hungarian authorities of their duty to consult  in compliance  with this obligation , since 
this duty is important for the application and interpretation of the enacted laws and any future 
amendments.  
The ECB re iterates that, in accordance with Article 4 of Decision 98/415/EC, the ECB must be 
consulted ‘at an appropriate stage’ in the legislative process, which implies that such consultation should take place at a point in the legislative process that affords the ECB sufficient time to 
examine the draft legislative provisions and adopt its opinion. Following from the wording of Article 3(4) of Decision 98/415/EC, Member States are obliged to suspend the process of adoption 
of draft legislative provisions pending s ubmission of the ECB’s opinion to allow the relevant 
national authorities to meaningfully consider the ECB’s opinion prior to adoption of the provisions.  
In this respect, the ECB stresses that even in cases of particular urgency or where the legislation 
has reached an advanced stage, the national authorities are not relieved of their duty to consult the 
ECB at an appropriate stage in the legislative process that allows suff icient time for: (a) the ECB to 
examine the draft legislative provisions and adopt it s opinion in all required language versions ; and 
(b) the national authorities to take into account the ECB’s views in accordance with Decision 98/415/EC. The ECB would appreciate the Ministry honouring its obligation to consult the ECB 
line with the provis ions of Decision 98/415/EC in the future.  
 
3. Coherence and l egal certainty  
The draft law  and the draft decree  replace the references to the H FSA and its competences by a 
reference to the MNB  and its new tasks and competences in various legal acts. In doing  so, they 
fail to  provide an adequate level of legal certainty, since they refer to the new integrated 
supervisory institutional regime using both ‘MNB ’ and ‘Supervisory Authority ’ and provides 
clarification only in certain cases
9. In the interest of  legal certainty , the ECB suggest s using the 
single term  ‘Supervisory Authority ’ in all amended legal acts in which a reference to the new 
integrated supervisory institutional regime is intended . 
Furthermore,  Article 16 5 of the draft law still contains a reference to the H FSA,  which is 
inconsistent with the future integrated framework of financial supervision under the sole 
competence of the MNB.  
 
 
 
                                                           
9  See Articles 11, 39, 75, 104, 107, 113, 126, 133, 138, 145, 164 and 180 of the draft law. 
ECB -PUBLIC 
4 4. The proposed timeline for the effective restructuring of financial supervision in Hungary  
The new Law on the MN B provides that the  MNB is to be fully functional as regards its new 
supervisory tasks on 1 October 201310. In this regard , the ECB noted in Opinion CON/2013/5611 
that the new Law on the MNB does not provide for a sufficient period of time between its  adopti on 
and the dissolution of the HFSA, which is also the date on which the MNB shall commence 
performing its new tasks. Most  of the provisions of the draft law and the draft decree are also due 
to enter into force on 1 October 201312. 
The ECB w ishes to  reitera te that legal certainty would require a longer period of time between the 
adoption and  application of the provisions of the draft law  and the draft decree  in order to enable 
the entities operating in the financial markets to bring their  internal procedures  into line with the 
new structure of financial supervision in Hungary , thus providing for greater stability within  the 
financial system.  
 
5. Central bank independence and supervisory independence  
5.1  During the current consultation procedure , the new Law on the MNB was adopted without taking 
into account all the ECB’s observations as regards the MNB’s independence;  therefore concerns 
remain regarding compliance with the principle of central bank independence enshrined in Article 
130 of the Treaty . 
5.2  As regards the draft law, the Law on the HFSA currently empowers  the HFSA President to adopt 
secondary legislation on regulatory matters within his competence.  Following the transfer of 
supervisory tasks from the HFSA to the MNB , the MNB , as general successor , will inherit  these 
legislative powers. On th is basis, Article 183 of the draft law repeals 47 decrees adopted by the 
HFSA President , including , inter alia , the decree on the payment, calculation and conditions for the 
supervisory fee13. In Opinion CON/201 3/56, the ECB assum ed that the HFSA President’s decree 
providing financing for the supervisory tasks will continue to apply after the transfer of supervisory 
tasks. In the absence of such continued effect , and also considering  the above observations 
concer ning the timeline, the MNB will be unable to raise funds from the supervised entities to 
cover the cost s of its supervisory activities, a t least temporarily  until the adoption of relevant new 
financing rule s. In the meantime, the MNB  will therefore be obli ged to  finance its supervisory 
activities from existing resources. This raises serious concerns as regards the MNB’s financial 
independence. In Opinion CON/2013/56 , the ECB highlighted that in order to guarantee the MNB’s  
financial independence , the MNB  should be involved in determining the amount of financial 
contribution payable by supervised entities, and should also independently define the methods to be 
used to calculate  such contributions, taking into account its actual costs. On the other hand, and in 
                                                           
10  See Article 172 of the draft law. 
11  See paragraph 3.1.11 of CON/2013/56. 
12  See Article 181 of the draft law. 
13  See point 23 of Article 187. 
ECB -PUBLIC 
5 line with the principle of central bank independence, the MNB should be able to do this at its own 
pace and discretion, without ending up  in a situation where it  has insufficient financial resources to 
carry out its ESCB -related tasks. The principle of financial independence requires an NCB to have 
sufficient means to perform its ESCB -related tasks as well as its national tasks, including the tasks 
newly entrusted to the MNB. Therefore,  the HFSA President’s decree s providing financing for the 
supervisory  tasks should continue to apply after the transfer of supervisory tasks to the MNB . 
5.3  The Core Principles for Effective Banking Supervision  developed by the Basel Committee on 
Banking Supervision14 provide that  ‘[t]he supervisor possesses operational ind ependence, 
transparent processes, sound governance, budgetary processes that do not undermine autonomy and 
adequate resources, and is accountable for the discharge of its duties and use of its resources’15. 
The lacuna  resulting  from the general repeal of al l legislation as of  the effective date of the transfer 
of supervisory tasks from the HFSA to the MNB , would – in addition to causing legal uncertainty 
for supervised entities – affect  the MNB ’s ability to  take independent supervisory decisions.  
The ECB considers  that for reasons of legal certainty,  unless these decrees beco me obsolete  from 
an operational rather than an institutional point of view , the legislation adopted by the HFSA 
President  should continue to apply after the transfer of supervisory tasks from the HFSA to the 
MNB  until the MNB is ready to adopt new decrees regulating the subject matter  at hand . 
Introducing a general clause into the draft law to this effect could eliminate the concerns outlined 
above . 
5.4  Moreover , pursuant  to Article 20 of  the draft law, the MNB will only be able to withdraw the 
operating licence of a credit institution after obtaining  the approval of the Minister of National 
Economy . This  is not in line with the principle of supervisory independence16. This should be 
given due consideration when formulating the amendments to  the specific legal acts reflecting the 
conduct of tasks and competences of the HFSA  to be transferred to the MNB  by the draft law.  
 
6. Division of macro -prudential  competences between the Government and the MNB  
The ECB note s that the new law on the M NB assigns the fundamental tasks related to the 
exploration and management of systemic risks to  the MNB , thus entrusting it with the conduct of 
macro -prudential policy and macro- prudential oversight. However, the definition of certain issues  
 
 
 
                                                           
14  See the website of the Bank for International Settlements (BIS) at http://www.bis.org/publ/bcbs230.pdf. 
15  See Principle 2 of the C ore Principles for Effective Banking Supervision. 
16  See also Principle 2.1 of the Core Principles for Effective Banking Supervision.  
ECB -PUBLIC 
6 related to macro -prudential policy remains  in the competence of the G overnment. As regards the 
Law on c redit institutions and f inancial e nterprises17, the L aw on c apital m arkets18, and the Law on  
the protection of c onsum ers19, the draft law does not adequately reflect the division of tasks 
between the MNB and the Government to be introduced as of 1 October 2013 by the new Law on 
the MNB . Each of these legal acts would benefit from the introduction of additional provisions 
providing for a further transfer of Government  competences to the MNB . These could include, for 
example , provisions  relating to defining liquidity requir ements for credit institutions and 
mismatches in the structures of maturity of foreign exchange exposur es; the personal, 
organisational and technical requirement s applicable to clearing houses;  and the definition of 
consumer creditworthiness . 
At the same time , the ECB expect s to be consulted on  any draft national legislation prepared by the 
MNB Governor tha t falls within the ECB’s competence, in accordance with the provisions of 
Council Decision 98/415/EC.  
 Finally, and also in connection with the provisions of the draft law providing for the operational 
conduct of the new supervisory and macro -prudential functions of the MNB, the ECB would 
appreciate receiving feedback from the consulting authority as regards steps taken in order to 
address the outstanding issues concerning central bank independence as noted  in this opinion and 
in Opinion CON/2013/56.  
 This opinion is without  prejudice to the conclusions of the European Systemic Risk Board ’s 
follow -up assessment of Recommendation ESRB/2011/3 of the European Systemic Risk Board of 
22nd December 2011 on the macro -prudential mandate of national authorities20, whi ch will be 
prepared pursuant to Article 17 of Regulation (EU) No 1092/2010 of the European Parliament and 
of the Council of 24 November 2010 on European Union macro- prudential oversight of the 
financial system and establishing a European Systemic Risk Boar d21.  
 
                                                           
17  See the amendments to Article 235 of Law CXII of 1996. 
18  Law XLVII of 2008. 
19  Law CLV of 1997. 
20  OJ C 41, 14.2.2013,  p.1. 
21  OJ L 331, 15.12.2010, p. 1. 
ECB -PUBLIC 
7 7.  The MNB’s cooperation with other bodies  
One of the amendments  to the draft law22 repeals the provision that allows  the MNB to forward 
individual statistical data pertaining to the activities of investment firms and commodity dealers to 
the E CB and  the ESCB  without it being considered an infringement . All observations made in 
paragraph 3.1.9 of Opinion CON/2013/56 are also valid in this case and the draft law should 
therefore reflect the legal obligation to cooperate with the ESCB and the ECB in the  field of 
statistics.  
 
This opinion will be published on the ECB’s webs ite. 
  
Done at Frankfurt am Main, 7 October 2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI  
                                                           
22  Point 8 of amending proposal T/12018/3.