Opinion of the European Central Bank of 12 July 2010 on amendments to the Law on the Magyar Nemzeti Bank introducing salary reductions (CON/2010/56) 

Date: 2010-07-12
Institutions: European Central Bank
Subjects: Hungary, central bank, national law, pay cut

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 July 2010 

on amendments to the Law on the Magyar Nemzeti Bank introducing salary reductions 

(CON/2010/56) 

Introduction and legal basis 

On 1 July 2010, the European Central Bank (ECB) received a request from the Hungarian Ministry of the 

National Economy for an opinion on a draft law amending, inter alia, the Law on the Magyar Nemzeti 
Bank (hereinafter the ‘draft law’)1. 

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  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions2, as the 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 draft law 

1.1   On 8 June 2010 the Hungarian Prime Minister announced an action plan containing 29 measures to 

establish  a  balanced  budget.  One  of  these  measures  is  the  implementation  of  a  HUF 2 000 000 

monthly  wage  ceiling  in  the  public  sector.  This  is  equal  to  10  times  the  average  gross  monthly 

salary of employees in the national economy. According to the explanatory memorandum attached 

to  the  draft  law,  the  proposed  measure  would  allow  a  more  performance-based  and  equitable 

income  distribution  in  the  public  sector  and  would  strengthen  the  public  administration’s 

efficiency.  

1.2  Article 95 of the draft law will amend Article 53(1) of Act LVIII of 2001 on the Magyar Nemzeti 

Bank (hereinafter ‘Law on the MNB’) according to which the total salary of the MNB’s Governor 

in  a  given  year  will  be  the  total  salary  established  for  the  Governor  for  the  preceding  year, 

increased  by  the  increment  calculated  on  the  basis  of  the  consumer  price  index  expected  for  the 

current  year,  as  contained  in  the  convergence  programme  submitted  to  the  Commission  of  the 

1  

2  

Draft law T/581 on the adoption and amendment of certain economic and financial legal acts, submitted to the Parliament 
by the Minister for the National Economy on 2 July 2010. Article 95 submitted to the ECB amends the Law on the MNB. 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                 
European Union in the preceding year. Furthermore, according to the ECB’s information, the ‘total 

salary of the Magyar Nemzeti Bank’s Governor’ has been determined in a shareholder resolution 

by the Minister for Finance on behalf of the Hungarian State in 2000 and has been subject since to 

Article 53(1) of the Law on the MNB. The proposed provision intends to introduce a ceiling on the 

Governor’s salary providing that ‘the total monthly salary of the MNB’s Governor shall be, in the 

period from 1 March of a given year to the end of February of the next year, 10 times the average 

gross  monthly  salary  of  employees  in  the  national  economy  of  the  previous  year,  as  officially 

published by the Central Statistical Office’. 

1.3  

In addition to the Governor, the Deputy Governors, the members of the Monetary Council and the 

Supervisory Board are also affected by the draft law, since their salary is based on the Governor‘s 

salary  under Article  53  of  the  Law  on the  MNB.  Against  this  background,  the  proposed  changes 

result  in  a  decrease  of  approximately  75%,  compared  to  the  Governor’s  present  salary,  and 

accordingly the proposed cut in salary would also result in a decrease in the salary of the Deputy 

Governors, as well as the members of the MNB’s Monetary Council and Supervisory Board. 

2. 

General observations 

The appropriate time to consult the ECB 

2.1  The  consulting  authority  submitted  Article  95  of  the  draft  law  to  the  ECB  on  1  July  2010, 

requesting the ECB’s opinion as soon as possible. According to information received by the ECB, 

the Parliament expects to adopt the draft law before 19 July 2010 when the spring session of the 

parliamentary legislative process ends. Once adopted by the Parliament, the relevant provisions of 

the draft law will enter into force on the eighth day following its publication. Moreover, no explicit 

time limit for submission of the opinion has been set. Since the date of receipt of the consultation 

request,  further  steps  towards  the  adoption  of  the  draft  law  have  been  taken  in  the  Hungarian 

Parliament. 

2.2 

In  cases  of  particular  urgency  that  do  not  allow  for  a  normal  consultation  period,  the  consulting 

authority  may  indicate  urgency  in  the  consultation  request  and  ask  for  a  shorter  deadline  for  the 

ECB’s  opinion  to  be  adopted.  The  ECB  would  like  to  emphasise  that  even  in  such  cases  a 

minimum one-month deadline applies according to Article 3(1) of Decision 98/415/EC. This does 

not  prejudice  the  consulting  authority’s  duty  under  Articles  127(4)  and  282(5)  of  the  Treaty  to 

consult the ECB on national draft legislative provisions falling within its fields of competence at an 

appropriate stage in the national legislation process, as provided by the second sentence of Article 4 

of  Decision  98/415/EC.  This  implies  that  the  consultation  should  take  place  at  a  point  in  the 

legislative process which affords the ECB sufficient time to examine the draft legislative provisions 

and  to  adopt  its  opinion  in  all  required  language  versions,  and  which  also  enables  the  relevant 

national authorities to take the ECB’s opinion into consideration before the provisions are adopted. 

2 

 
Article 3(4) of Decision 98/415/EC also obliges Member States to suspend the adoption process for 

draft legislative provisions, pending receipt of the ECB’s opinion. 

2.3.   In the event of extreme urgency, the time limit of one month may be reduced. In accordance with 

Article 3(2) of Decision 98/415/EC, the consulting authority shall state the reasons for the urgency. 

The ECB considers that the justification provided by the consulting authority cannot be considered 

as a case of extreme urgency within the meaning of Article 3(2). 

2.4   The  ECB  reiterates  its  position  that  even  cases  of  particular  urgency  do  not  relieve  national 

authorities from their duty to consult the ECB and to allow sufficient time to take into account its 

views in accordance with Decision 98/415/EC. Any substantive amendments to the draft law have 

to be submitted to the ECB to allow it to adopt its opinion on the most recent text. Furthermore, 

with respect to the present consultation, the process of adoption of the draft law should have been 

suspended. The ECB’s comments on the provisions on which it was consulted do not eliminate the 

breach  of  the  obligation  to  consult  it.  The  ECB  would  appreciate  the  Ministry  for  the  National 

Economy giving due consideration to honouring its obligation to consult the ECB in the future. 

Legislation subject to consultation 

2.5  The ECB understands that the draft law amends several legal acts including the Law on the MNB. 

This opinion only covers Article 95 of the draft law that the consulting authority has submitted for 

consultation.  The  ECB  also  advises  that  this  Opinion  is  without  prejudice  to  any  other  ECB 

opinions  concerning  the  legal  acts  affected  by  the  draft  law  and  falling  under  the  ECB’s 

competence. The ECB expects to be consulted also on such matters. 

3. 

Central bank independence 

3.1  When a Statute of a national central bank (NCB) (in this case the Law on the MNB) is amended, 

the amending law should ensure that central bank independence guaranteed by Article 130 of the 

Treaty  and  Article  7  and  Article  14.2  of  the  Statute  of  the  ESCB  and  the  ECB  (hereinafter  the 

‘Statute  of  the  ESCB’)  is  respected.  Compatibility  of  a  Member  State’s  legislation,  including  its 

NCB’s Statute, with the requirements of the Treaty and the Statute of the ESCB concerning central 

bank independence must be ensured on accession to the Union. Compatibility with Article 130 of 

the  Treaty  and  Article  7  of  the  Statute  of  the  ESCB  is  a  fundamental  aspect  of  the  legal 

convergence in a Member State examined in the convergence reports required by Article 140(1) of 

the Treaty to assess a country’s readiness to join the euro area. 

Financial independence 

3.2  As recalled in the ECB Convergence Reports 2008 and 2010 and stressed in several ECB opinions3 

on  issues  concerning  autonomy  in  staff  matters,  an  aspect  of  an  NCB’s  financial  independence, 

3  

ECB  Opinions  CON/2008/9,  CON/2008/10,  CON/2009/45,  CON/2009/47,  CON/2010/42  and  CON/2010/51.  All  ECB 
opinions are available on the ECB’s website at www.ecb.europa.eu. 

3 

 
                                                 
Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary 

for  the  NCB  to  perform  independently  the  tasks  conferred  on  it  by  the  Treaty,  the  Statute  of  the 

ESCB and national legislation. Furthermore, an NCB may not be put into a position where it has 

limited or no control over its staff, or where the government of a Member State is in a position to 

influence the NCB’s policy on staff matters.  

3.3  By  amending  Article  53(1)  of  the  Law  on  the  MNB,  Article  95  of  the  draft  law  introduces  a 

threshold  for  the  Governor’s  salary  which  results  in  a  decrease  of  the  Governor’s  salary  and 

consequently the salaries of the Deputy Governors and the members of the Monetary Council and 

the Supervisory Board.  

3.4  To protect the MNB’s autonomy in staff matters, part of the principle of central bank independence 

under  Article  130  of  the  Treaty,  the  Hungarian  authorities  have  an  obligation  to  ensure  that  any 

amendment  to  the  legislative  provisions  on  the  remuneration  of  the  MNB’s  staff  is  decided  in 
cooperation with the MNB, taking due account of the MNB’s views4. 

Personal independence of the members of MNB’s decision-making bodies 

3.5  To  comply  with  the  Treaty  requirements  for  personal  independence  of  the  members  of  NCB’s 

decision-making  bodies  who  are  involved  in  the  performance  of  ESCB-related  tasks,  any 

amendment  to  the  salaries  of  the  Governor  and  other  members  of  the  MNB’s  decision-making 

bodies  who  are  involved  in  the  performance  of  ESCB-related  tasks  should  not  affect  the  terms 

under which they have been appointed. Consequently, the draft law should specifically provide that 
such an amendment may apply only to future appointments5. 

Conclusion 

3.6  For  these  reasons  the  process  for  adoption  of  the  draft  law  should  ensure  the  involvement  of  the 

MNB  and  the  draft  law  should  be  amended  to  comply  with  the  principle  of  central  bank 

independence. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 12 July 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

4  
5  

See for example paragraph 4.3 of ECB Opinion CON/2010/42. 
See paragraph 3.2.2 of ECB Opinion CON/2008/10 and ECB Opinion CON/2010/42. 

4