Opinion of the European Central Bank of 31 May 2012 on the Law on the Magyar Nemzeti Bank (CON/2012/43)
Date: 2012-05-31
Institutions: European Central Bank
Subjects: Hungary, central bank, dismissal, institutional activity, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 31 May 2012 

on the Law on the Magyar Nemzeti Bank 

(CON/2012/43) 

Introduction and legal basis 

On 18 May 2012, the European Central Bank (ECB) received a request from the Hungarian Ministry for 

the  National  Economy  for  an  opinion  on  an  amended  version  of  a  draft  law  (hereinafter  the  ‘amended 

draft  law’)  introducing  changes  to  Law  CCVIII  of  2011  on  the  Magyar  Nemzeti  Bank  (hereinafter  the 
‘MNB  Law’)1.  The  ECB  has  previously  expressed  its  views  on  an  earlier  version  of  the  draft  law  in 

Opinion CON/2012/26. 

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  amended  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 amended draft law 

The  amended  draft  law  differs  from  its  earlier  version,  on  which  the  ECB  commented  in  Opinion 

CON/2012/26, and it introduces several additional amendments to the MNB Law. 

With regard to the rules for dismissal of Monetary Council members, the amended draft law introduces 

changes to Article 46(10) of the MNB Law, instead of repealing it, as was the case in the earlier version 

of the amendments. The two explicit grounds for dismissal of the members of the Monetary Council are 

now replaced by a reference to Article 14.2 of the Statute of the European System of Central Banks and 

of  the  European  Central  Bank  (hereinafter  the  ‘Statute  of  the  ESCB’).  Related  amendments  to  Articles 

46(12),  47(5)  and  47(6)  further  specify  the  procedure  for  dismissal  of  the  members  of  the  Monetary 

Council members. Article 77 of the MNB Law introduces changes to the title of the Labour Court which 
is referred to in Articles 46(12) and 47(5) of the MNB Law3. Article 77 of the MNB Law has also been 

1  
2 
3  

Magyar Közlöny, 2011/166., 30.12.2011, p. 41648. 
OJ L 189, 3.7.1998, p. 42. 
With effect from 1 January 2013 the Labour Court shall be called ‘Administrative and Labour Court’. 

 
 
 
 
                                                 
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amended  by  the  addition  of  explicit  references  to  Article  14.2  of  the  Statute  of  the  ESCB  and  the 

jurisdiction of the Court of Justice of the European Union.  

The amended draft law is unchanged regarding the repeal of Article 34 and Article 46(17) of the MNB 

Law. Article 34 contains the MNB’s obligation to submit the agendas for Monetary Council meetings to 

the  Government  and  the  right  of  the  Government’s  representative  to  be  present  at  Monetary  Council 

meetings.  Article  46(17)  provides  for  the  abolition  of  the  Monetary  Council  when  Hungary  adopts  the 

euro. 

The  amended  draft  law  no  longer  contains  a  repeal  of  Article  30  of  the  Transitional  Provisions  to 

Hungary’s  Fundamental  Law,  which  had  allowed  for  the  possibility  of  a  merger  of  the  MNB  and  the 

Hungarian Financial Supervisory Authority. The ECB understands that the provision repealing Article 30 

of the Transitional Provisions to Hungary’s Fundamental Law has been carved out in a stand-alone bill, 

which will be voted on by Parliament at the same time as the amended draft law. 

2.   General observations 

The  ECB  welcomes  the  fact  that  the  Hungarian  authorities  have  taken  into  account  the  ECB’s  earlier 

observations in Opinion CON/2012/26 regarding Article 46(10) of the MNB Law, thereby strengthening 

legal  certainty  with  respect  to  the  grounds  for  dismissal  of  Monetary  Council  members.  However,  the 

amended  draft  law  still  fails  to  address  a  number  of  previously  highlighted  concerns  as  regards  the 

MNB’s independence. Therefore, the ECB maintains its view that the provisions of the current MNB Law 

do  not  go  far  enough  to  re-establish  central  bank  independence,  notwithstanding  this  move  in  the  right 

direction, as provided by the amended draft law.  

The  frequency  of  amendments  to  the  MNB  Law  has  been  criticised  in  previous  ECB  Opinions,  as  it 

contributes  to  an  unstable  basis  for  the  operation  of  the  MNB.  Against  this  background,  the  ECB 

emphasises  its  preference  for  addressing  the  remaining  open  issues  on  the  MNB’s  independence  listed 

below  as  part  of  the  present  parliamentary  procedure  on  the  MNB  Law  amendments  in  order  to  avoid 

making further amendments at a later stage. 

3.  

Possibility to vary the number of Monetary Council members; appointment of a third Deputy 

Governor 

The  concerns  expressed  in  Opinions  CON/2011/104,  CON/2011/106  and  CON/2012/26  on  the 

composition of the MNB’s decision-making bodies are still valid. In particular, it is of concern that the 

number of Monetary Council members can be varied, and a third Deputy Governor can be appointed, and 

that such steps can be taken without consulting the MNB and considering its needs, or without providing 

reasonable  arguments  to  support  an  expansion  against  the  MNB’s  advice.  This  situation  gives  rise  to 

concerns  as  to  whether  these  provisions  could  be  used  to  influence  decision-making  processes,  to  the 

detriment of central bank independence. 

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4.  

Executive powers of the Monetary Council  

The fact that the Monetary Council has a mandate on policy implementation and the day-to-day running 

of the MNB also raises concerns. Such a mandate allows for the Monetary Council to be responsible not 

only for setting policies, but also for (a) their implementation, and (b) the oversight of its own actions. 

These  concerns  are  exacerbated  by  the  fact  that  different  standards  apply  to  the  employment  and  other 

legal relationships of executive and non-executive members of the Monetary Council. 

5.   Remuneration of the MNB’s decision-making bodies 

The  ECB  remains  concerned  about  the  frequent  changes  to  the  remuneration  of  the  members  of  the 

MNB’s decision-making bodies. Such changes have been made without the MNB’s prior consultation and 

with disregard for its views. This conduct amounts to pressure on the members of the MNB’s decision-
making bodies by the national authorities4. The ECB repeats its view that, in its present form, Article 51 

of the MNB Law should only apply for future appointments following prior consideration of the MNB’s 

views.  

6. 

Other outstanding concerns related to the MNB Law 

6.1  Grounds for dismissal of the members of the Monetary Council  

The MNB Law provides for a unique two-step dismissal procedure of the members of the Monetary 

Council. The first step involves notifying the person concerned about a proposal for his dismissal. 

The decision to make a proposal for a dismissal is taken by the Parliament’s competent committee 

with  regard  to  the  external  members  of  the  Monetary  Council,  and  by  the  Prime  Minister  with 

regard to the Governor and other Monetary Council members. This proposal for dismissal is subject 

to  judicial  review  under  national  law.  In  the  second  step,  the  proposal  for  dismissal  can  only  be 

submitted  to  the  President  of  Hungary if  no  action  for  domestic  judicial  review  has been filed or 

following  the  final  ruling  of  the  Labour  Court.  The  amended  draft  law  specifies  that  the  right  to 

appeal to the Labour Court does not prejudice the right to appeal to the Court of Justice as specified 

in Article 14.2 of the Statute of the ESCB.  

The ECB welcomes the reference to Article 14.2 of the Statute of the ESCB which stipulates that 

governors of national central banks who have been dismissed from office may refer such a decision 

to the Court of Justice. National legislation should either refer to the Statute of the ESCB or remain 

silent on the right to refer such a decision to the Court of Justice as Article 14.2 of the Statute of the 
ESCB is directly applicable5. Consequently, the decision of the President of Hungary to dismiss the 

Governor is open for review by the Court of Justice which has exclusive jurisdiction as regards a 

decision  to  relieve  a  governor  from  office.  At  the  same  time,  to  ensure  continuity  of  the  MNB’s 

4  

5  

See, for example, paragraph 4.3 of Opinion CON/2010/56, paragraph 8 of Opinion CON/2011/104, and paragraph 4.3 of 
Opinion CON/2011/106. 
See Section 2.2.3 of the ECB’s Convergence Reports May 2010 and May 2012. 

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operations,  it  is  advisable  that  the  amended  draft  law  should  provide  for  consultation  with  the 

MNB’s Executive Board by the Prime Minister before the initiation of a dismissal procedure for the 

MNB Governor.  Furthermore, the ECB understands that the amended draft law intends to limit the 

President’s power to dismiss the MNB Governor where the Labour Court has ruled in favour of the 

proposal for dismissal. However, in order to remove the scope for different interpretations, the legal 

drafting of this provision could be improved. 

6.2  Replacement of the Governor 

The  ECB  reiterates  its  observation  from  Opinion  CON/2010/91  related  to  the  replacement  of  the 

MNB’s Governor. Pursuant to Article 47(8) of the MNB Law, the Deputy Chair of the Monetary 

Council  may  replace  the  Governor  in  the  latter’s  absence.  The  MNB  Law  needs  to  provide 

sufficient guarantees and rules for a successor to the Governor in the event of termination of office 

due  to  expiry  of  the  term  of  office,  resignation,  dismissal  or  death  to  avoid  any  external  ad  hoc 

interference and at the same time to ensure the smooth and continuous functioning of the Monetary 
Council6.  

6.3  Other remaining issues are specified in the ECB’s Convergence Reports and concern, inter alia, the 

oath  taken  by  the  MNB’s  Governor  and  Deputy  Governors,  the  single  spelling  of  the  euro  in 

several  Hungarian  legal  acts  and  the  requirements  for  legal  integration  of  the  MNB  into  the 
Eurosystem7.  Previous  ECB  Opinions  have  already  pointed  out  that  the  recast  of  the  MNB  Law 

offered the Hungarian authorities the opportunity to make the necessary adjustments to ensure the 

MNB’s full integration into the Eurosystem when Hungary adopts the euro.  

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

Done at Frankfurt am Main, 31 May 2012. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

6  
7  

See paragraph 3.2 of Opinion CON/2010/91. 
The ECB’s Convergence Reports are available on the website of the ECB under www.ecb.europa.eu. 

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