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)
Date: 2006-12-06
Institutions: European Central Bank
Subjects: Hungary, central bank, conflict of interest, counterfeiting, issuing of currency, money, national law

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  amending  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  received  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  Central  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 imitations thereof, including certain new rights and 

obligations concerning the fight against counterfeiting; and 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
(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 European Central Bank in 2004’. The ECB would like 

to point out that although it is of crucial importance for Hungarian legislation to comply with the 

Treaty regarding a national central bank’s institutional and personal independence, the ECB’s 2004 

Convergence Report highlighted several other issues that have not been addressed by the draft law, 

such as – with respect to the integration of the MNB into the Eurosystem – the failure to recognise 

the  ECB’s  powers  in  the  field  of  monetary  policy  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 been amended several times in the last few years, the 

ECB  would  also  like  to  stress  the  importance  of  legal  certainty.  It  is  in  this  regard  essential  for 

fundamental  legislation  regulating  the  central  bank  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  Minister  of  Justice  does  not  need  to  be  requested 

concerning  the  regulations  issued  by  MNB’s  Governor’.  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 deletes the reference to the intentional failure to 

submit a wealth declaration and the intentional disclosure 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 

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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 the Monetary Council to fulfil the conditions required 

for  the  performance  of  their  duties  as  a  ground  for  dismissal,  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’  statutes  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 counterfeiting2. 

3.2.2  With respect to the legal integration of the 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 medals 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 the 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 law5. 

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  ‘euro’.  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  
3  
4  

5  
6  

OJ L 181, 4.7.2001, p. 6. 
OJ L 139, 11.5.1998, p. 1. 
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). 
Case 34/73 Variola v Amministrazione italiana della Finanze [1973] ECR 981. 
See Council Regulation (EC) No 1103/97 of 17 June 1997 on certain 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  Community  legislation  on  euro 
coins  in  1998  and  1999,  as  well  as  Council  Regulation  (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). 

3 

                                                 
Community and national legislative provisions. On the basis of these considerations, and in view of 

the  Community’s  exclusive  competence  to  determine  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  MNB  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  law.  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  pursuant  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 provisions7 expressly requires Member States to take 

the measures necessary to ensure compliance 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.  

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