EN ECB -PUBLIC  
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 10 November 2022  
on the dividend payments , recapitalisation and reimbursement of the Magyar Nemzeti Bank  
(CON/2022/ 37) 
 
 
Introduction and legal basis  
On 7 October 2022, the European Central Bank (ECB) received a request from the Hungarian Ministry of 
Finance for an opinion on a draft law amending the Law on  the Magyar Nemzeti Bank1 and Decree 
221/2000,  (XII.19.) of the Government on the special reporting and accounting requirements of the Magyar 
Nemzeti Bank  (hereinafter the ‘draft law’ ).  
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 ( TFEU ) and the third indent of Article 2(1) of Council Decision 
98/415/EC
2, as the draft law concerns 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, t he Governing Council 
has adopted this opinion.  
 
1. Purpose of the draft law  
1.1. The main purpose of the draft law is to modify the provisions of the Law on the Magyar Nemzeti 
Bank (hereinafter the ‘Law  on the MNB ’) and the Decree 221/2000, (XII.19.) of the Government on the 
special reporting and accounting requirements of the Magyar Nemzeti Bank (hereinafter the ‘ Decree on the 
MNB’s accounts ’) that relate to the MNB’s dividend payments and the MNB’s recapitalisation and 
reimbursement by the State at the MNB’s initiative .  
 
Dividend payments . 
1.2. Under the current provisions of the Law on the MNB3, the MNB shall pay a dividend from the portion 
of its retained earnings that are not used to offset any negative amount in the MNB’s  revaluation reserves4, 
supplemented by the MNB’s profit s from the year  under review , in accordance with a decision of the MNB’s 
Executive Board5. 
1.3. As noted in the explanatory memorandum accompanying the draft law, the draft law would 
 
1  A Magyar Nemzeti Bankról szóló 2013. évi CXXXIX. törvény . 
2  Council Decision 98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
3  See Article 166(1) of the Law on the MNB.  
4  Pursuant to Article 147(5) of the Law on the MNB.  
5  Pursuant to Article 12(4), point b), of the Law on the MNB.  
ECB -PUBLIC  
2 introduce a rule- based dividend payment practice, in line with common practices at Union central banks. 
Under the draft law the new dividend payment regime provides for automatic and discretionary dividend 
payments. In particular, the draft law provides that if the amount of the  MNB’s equity exceeds its subscribed 
capital at the end of the year under review, the MNB will pay 50  % of its profit for the year under review as 
a dividend (automatic dividend payment). In addition, the draft law provides that the MNB will pay dividends , 
based on a decision of its Executive Board , from the positive amount of its retained earnings supplem ented 
by the loss or 50  % of its profit from the year under review, up to the amount of the equity exceeding the 
subscribed capital (discretionary dividend payment). The dividend payment is due within 30 days of the 
MNB sending the notification of the report for the year under review6 to the shareholders . 
 
Recapitalisation and reimbursement . 
1.4. Under the current provisions of the Law on the MNB7, where the amount of loss incurred in the 
year under review exceeds  the retained earnings, the difference shall be reimbursed from the central budget 
directly to the retained earnings within eight days of the shareholder’s receipt of the notification of the annual 
financial statements for the year  under review8. In addit ion, under the current provisions of the Law  on the 
MNB9, if the balance of the revaluation reserves  is negative, and this negative balance exceeds the sum of 
the retained earnings and the result for the year under review, a direct cash disbursement must be made from the central budget to the retained earnings up to the level of the negative balance that exceeds the 
sum of the retai ned earnings and the result of the year under review.  
1.5. As noted in the explanatory memorandum accompanying the draft law, the current recapitalisation 
and reimbursement rule may require reimbursement from the central budget, regardless of the needs of 
the central bank . However , according to the explanatory memorandum,  although there is sufficient net 
equity to allow the MNB to perform its fundamental tasks, the current rules may require a significant lump-
sum reimbursement from the central budget that could lead to a sub- optimal policy mix. In a stagflationary 
environment, monetary policy needs to t ighten conditions to bring inflation down, while fiscal policy may 
implement targeted programmes to support the real economy. However, immediate fiscal pressure stemming from a significant lump- sum reimbursement limits fiscal policy’s room for manoeuvre. T he MNB’s 
room for manoeuvre may be increased by giving a longer period of time to the State to fulfil the 
reimbursement obligation.    
1.6. Against this backdrop,  the draft law proposes to replace the existing recapitalisation and 
reimbursement regime by a new regime. In particular, the draft law provides that where the amount of equity 
falls below the subscribed capital at the end of the year under review , the difference will be reimbursed 
from the central budget directly to the retained earnings  over a period of five years, with equal instalments 
being paid every year, within 30 days of the shareholder’s receipt of the notification of the report for the 
year under review
10. For th is purpose,  the ‘equity ’ consists of the followi ng elements: (1) subscribed capital ; 
(2) retained earnings ; (3) valuation reserve;  (4) revaluation reserve due to exchange rate change ; (5) 
 
6  In accordance with Article 6(2) of the Law on the MNB.  
7  See Article 166(3) of the Law on the MNB.  
8  Pursuant to Article 6(2) of the Law on the MNB.  
9  See Article 147(4)  and (5) of the Law on the MNB.  
10  In accordance with Article 6(2) of the Law on the MNB.  
ECB -PUBLIC  
3 revaluation reserve of foreign currency securities ; and (6) the result of  the financial year  under review11. 
The ‘subscribed capital’ of the MNB is ten billion forints12. If the amount of the equity exceeds the subscribed 
capital, all outstanding repayment obligations cease. If, within the five- year period, the central budget incurs 
a new reimbur sement obligation, the new provisions  of the draft law  will apply to fulfilling this obligation .  
 
2. General o bservation  
2.1. The ECB would like to emphasi se that, although Member States with a derogation, like Hungary, 
do not yet participate in the third stage of economic and monetary union, they have a legal duty to adapt 
the statutes of their national central banks (NCBs) to ensure compatibility with the T FEU13 and the Statute 
of the European System of Central Banks (ESCB) and of the ECB ( hereinafter the ‘Statute of the ESCB’). 
Any legislative reform in non -participating  Member States  should aim to gradually achieve consistency with 
Eurosystem standards14. 
 
3. Specific observations  
3.1. Article 130 TFEU  and Article 7 of the Statute of the ESCB expressly prohibit the ECB, the NCBs , 
and the members of their decision- making bodies from seeking or taking instructions from U nion 
institutions, bodies, offices or agencies, from any government of a Member State or from any other body, 
on the one hand, and prohibits those U nion institutions, bodies, offices or agencies and any government of 
a Member State from seeking to influence th e members of the decision- making bodies of the ECB and the 
NCBs  in the performance of their  tasks, on the other.  The intention of these provisions is to shield the ESCB 
from all political pressure in order to enable it effectively to pursue the objectives ascribed to its tasks, 
through the independent exercise of the specific powers conferred on it  for that purpose by primary law15. 
National rules therefore cannot, without infringing Article 130 TFEU  and Article 7 of the Statute of the ESCB, 
place the NCB concerned in a situation where it is potentially exposed to political pressure or which in any 
way undermines its ability to carry out independently a task falling within the scope of the ESCB16.  
3.2. In that regard, in order to ensure the independence of the ECB, the authors of the TFEU provided, 
inter alia, in the third sentence of Article 282(3) TFEU , that it is to be independent in the management of its 
finances. While it is true that neither the TFEU nor the Statute of the ESCB lay down  an equivalent rule in 
respect of the NCBs, the fact remains that the basic tasks of the ESCB fall, through the ESCB, not only on 
the ECB but also on the NCBs17. The ECB has consistently held that the overall independence of the NCB 
concerned would be jeopardised if it could not autonomously avail itself of sufficient financial resources to 
perform the ESCB -related tasks required of it under the Treaty and the Statute of the ESCB18. In order to 
 
11  See Annex I. of the Decree on the MNB’s accounts.  
12  See Article 5(5) of the Law  on the MNB.  
13  See Article 131 TFEU . 
14  See, e.g., paragraph 3.4 of ECB Opinion CON/2008/34 and paragraph 2.1 of ECB Opinion CON/2017/17 . All ECB 
opinions are published on EUR -Lex. 
15  See, e.g., judgment of 26 February 2019 , Rimšēvičs and  ECB v Latvia, Joined Cases C -202/18 and C -238/18, 
EU:C:2019:139, paragraph 47. 
16  Judgment of 13 September 2022 , Banka Slovenije, Case C -45/21, EU:C:2022:670, paragraphs 97 and 104.  
17  Judgment in Banka Slovenije, Case C -45/21, cited above, paragraph s 98 and 99. 
18  ECB Convergence Report 2022, Chapter 2.2.3, first paragraph of the section  on ‘Financial independence’ . 
ECB -PUBLIC  
4 have at its disposal the funds necessary to carry out its tasks within the ESCB, national rules may not place 
the NCB concerned in a situation where it is forced to seek the consent of those political authorities in order 
to obtain funding or recapitalisation19. In order to participate in the implementation of the EU’s monetary 
policy, the establishment of reserves by the NCBs is essential20.  
3.3. The ECB has consistently held that, i n particular, any situation  should  be avoided whereby for a 
prolonged period of time an NCB’s net equity is below the level of its statutory capital or is even negative, 
including where losses beyond the capital and the reserves are carried over. Therefore, the event of an 
NCB’s net equity  becoming less than its statutory capital or even negative would require that the respective 
Member State provides the NCB wit h an appropriate amount of capital at least up to the level of the statutory 
capital within a reasonable period of time so as to c omply with the principle of financial independence21. It 
is unclear to what extent the draft law would ensure that the MNB’s equity would be restored up to the level 
of the MNB’s subscribed capital within a reasonable period of time, given that the amounts  to be reimbursed 
from the central budget are to be reimbursed in equal instalments over a period of five years. Moreover, to 
the extent that the amount of the MNB’s equity falls below its subscribed capital over a period of two or 
more successive years, t his could further exacerbate an inadequate or even negative capital position over 
a prolonged period of time in excess of five years. The ECB therefore suggests introducing a safeguard 
clause into the draft law  to the effect that in the event of an inadequate or even negative capital position 
during a prolonged  period, it should be ensured in the medium-term that the MNB's net equity capital does 
not remain below the subscribed capital for a prolonged period.  
3.4. With regard to profit allocation, an NCB’s statutes may prescribe how its profits are to be allocated, 
as is proposed by the draft law . Profits may be distributed to the State  budget only after any accumulated 
losses from previous years have been covered and financial provisions  deemed necessary to safeguard 
the real value of the N CB’s capital and assets have been created22. As previously noted by the ECB23, the 
NCB is best placed to assess independently what level of reserves is necessary to enable it to perform its 
tasks, and such a decision should not be the subject of a third party’s decision.   
 
 This opinion will b e published on EUR -Lex.  
  
 
19  Judgment in Banka Slovenije, Case C -45/21, cited above, paragraph 104.  
20  Judgment in Banka Slovenije, Case C -45/21, cited above, paragraph 100.  
21  ECB Convergence Report 2022, Chapter 2.2.3, fourth paragraph of the section on ‘Financial independence’ . 
22  ECB Convergence Report 2022, Chapter 2.2.3, first paragraph of the section on ‘Distribution of profits, NCBs’ capital 
and financial provisions’’ . 
23  See paragraph 3.4.3 of ECB Opinion CON/2017/17.  
ECB -PUBLIC  
5 Done at Frankfurt am Main, 10 November  2022.  
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE