Opinion of the European Central Bank of 28 June 2012 on the Magyar Nemzeti Bank (CON/2012/49)
Date: 2012-06-28
Institutions: European Central Bank
Subjects: Hungary, central bank, competence of the institution, disclosure of information, dismissal, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 28 June 2012 

on the Magyar Nemzeti Bank 

(CON/2012/49) 

Introduction and legal basis 

On 20 June 2012, the European Central Bank (ECB) received a request from the Hungarian Ministry for 

the National Economy for an opinion on a new draft law (hereinafter the ‘draft law’) introducing changes 
to  Law  CCVIII  of  2011  on  the  Magyar  Nemzeti  Bank  (hereinafter  the  ‘MNB  Law’)1.  Previous  ECB 
Opinions considered earlier versions of the draft law, now withdrawn from the Parliament2.  

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 provisions3, 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 

The  draft  law  introduces  additional  amendments  to  the  MNB  Law  compared  to  the  previous  draft 

legislation on which the ECB commented in Opinion CON/2012/43. 

The draft law amends Article 46(1) of the MNB Law to better delineate the division of responsibilities 

between  the  Monetary  Council,  which  will  focus  strictly  on  policy  formulation  and  related  oversight 

activities, and the Executive Board, which will be solely responsible for policy implementation. 

The draft law limits the possible combinations of the number of executive and non-executive members of 

the Monetary Council, by specifying in Article 46(3) that the number of non-executive members should 

be higher than the number of executive members, but by less than a two-to-one ratio.  

With regard to the rules for dismissal of Monetary Council members, the draft law carries over verbatim 
from the previous draft legislation4 the changes to Articles 46(10), 46(12), 47(5), 47(6), 77(1) and 77(2) 

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2  

3 
4  

Magyar Közlöny, 2011/166., 30.12.2011, p. 41648. 
Opinions  CON/2012/26  and  CON/2012/43.  All  ECB  Opinions  and  Convergence  Reports  are  available  on  the  ECB’s 
website at www.ecb.europa.eu. 
OJ L 189, 3.7.1998, p. 42. 
See ECB Opinion CON/2012/43. 

 
 
 
 
                                                 
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of  the  MNB  Law.  These  amendments  clarify  the  procedure  for  dismissal  of  members  of  the  Monetary 

Council and align it with 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’).  The  draft  law  further  improves  the 

wording of Article 47(6) by stipulating that a proposal for dismissal of the MNB Governor first requires a 

final ruling by the Labour Court that the conditions for dismissal specified in Article 14.2 of the Statute of 

the  ESCB  are  met.  In  addition,  the  draft  law  aligns  the  wording  of  Article  46(13),  regulating  the 

circumstances under which the other members of the Monetary Council can be removed from office, with 

the new wording of Article 47(6). 

The  draft  law  carries  over  from  the  previous  draft  amendment  law,  on  which  the  ECB  commented  in 

Opinion CON/2012/43, the repeal of Article 34 and Article 46(17) of the MNB Law. These amendments 

remove 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, as well as 

the abolition of the Monetary Council when Hungary adopts the euro. 

Finally, the draft law inserts a new Article 36(5) in the MNB Law to limit in time the disclosure of non-

classified  data  related  to  the  management  of  gold  and  foreign  exchange  reserves  for  up  to  10  years. 

Within this period the MNB Governor decides on the disclosure of such data. 

Since the adoption of CON/2012/43, Article 30 of the Transitional Provisions to Hungary’s Constitution - 

which had allowed for the possibility of a merger of the MNB with the Hungarian Financial Supervisory 

Authority - has been repealed through a separate amendment to the Constitution. 

2.   General observations 

The draft law addresses the most important remaining concerns regarding the MNB’s independence. The 
ECB notes  that this time the MNB was consulted on the draft  law, as required by national legislation5. 
The draft amendments, alongside a commitment6 not to increase the size of the Monetary Council during 

the term of the current MNB Governor, are an indication that the Hungarian Government is now ready to 

respect the MNB’s institutional independence. The ECB will monitor closely the observance in practice 

of central bank independence, and will continue to liaise with the Hungarian Government to address the 

remaining open issues, which were also acknowledged in the consultation letter. 

3.  

Specific observations 

3.1  Distribution of executive power among MNB decision-making bodies 

The draft law fully resolves the concerns in ECB Opinion CON/2012/43. 

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According to Article 32 of the Law on MNB, the MNB has to be consulted on any draft legal acts related its tasks. 
The public commitment was  made in letters on 18 June 2012  - referenced in the letter consulting the ECB - by Prime 
Minister Mr Orban to Commission President Mr Barroso and by the Chair of the Parliamentary Committee on Economic 
and Information Technologies Mr Rogan to Commission Vice-President Mr Rehn. 

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

Governor 

The  MNB  governance  structure  has  been  changed  through  making  the  number  of  non-executive 

members of the Monetary Council larger, but not by a wide margin, than the number of executive 

members. This aims to safeguard the MNB’s independence and in practice limits the ability of the 
Government to vary the number of Monetary Council members. Furthermore, the commitment7 not 

to  increase  the  size  of  the  Monetary  Council  during  the  term  of  the  current  MNB  Governor 

addresses the immediate concern at the lack of consultation of the MNB on the issue. However, the 

introduction  of  additional  checks  and  balances  in  this  area  is  advisable.  One  possibility  is  the 

introduction  of  a  consultation  procedure  with  the  Governor  in  office  before  appointing  any  new 

members  to  the  Monetary  Council.  This  would  ensure  the  necessary  dialogue  between  the 

appointing  body  and  the  central  bank  and  the  consideration  of  the  MNB’s  needs.  Another 

possibility  is  staggering  the  terms  of  office  of  members  of  the  Monetary  Council,  which  would 

ensure policy continuity and make it less likely that all Monetary Council members are appointed 

by the same Government. 

3.3  Rules of dismissal of Monetary Council members 

The  draft  law  addresses  in  a  satisfactory  manner  the  issues  of  personal  independence  of  the 

members of the MNB’s decision-making bodies related to the rules on their dismissal, which were 

raised in ECB Opinions CON/2012/26 and CON/2012/43. Article 46(13) of the draft law clarifies 
that in the two step dismissal procedure8 provided by the MNB Law, the national court examines 

whether the conditions for dismissal specified in Article 14.2 of the Statute of the ESCB are met 

and  the  decision  to  make  a  proposal  for  a  dismissal  can  only  be  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,  if  the  court 

establishes that these conditions are met.  

The ECB understands that the express reference in Article 47(5) of the MNB Law to Article 14.2 of 

the Statute of the ESCB clarifies that, in the event of a decision to dismiss the MNB Governor, the 

Governor may refer the decision to the Court of Justice irrespective of having sought remedy at the 

national court against the motion for dismissal.  

3.4  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  earlier  changes  had  been  made  without  the  MNB’s  prior 

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See footnote 5. 
As specified in paragraph 6.1 of CON/2012/43, the first step involves notifying the person concerned about a proposal for 
dismissal. The proposal for dismissal is subject to judicial review under national law. The proposal for dismissal can only 
be submitted to the Parliament, or in respect of the Governor and Deputy Governors to Hungary’s President if no action 
for  domestic  judicial  review  has  been  filed  or  following  the  final  ruling  of  the  Labour  Court.  The  second  step  is  a 
decision to dismiss the Governor and Deputy Governors by Hungary’s President, and for other members of the Monetary 
Council, by the Parliament.  

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consultation  and  disregarding  its  views9.  The  ECB  reiterates  its  view  that,  in  its  present  form, 

Article  51  of  the  MNB  Law  should  only  apply  for  future  appointments  and  subject  to  prior 

consideration of the MNB’s views. 

3.5  Empowering  the  MNB  Governor  to  limit  disclosure  of  data  related  to  management  of  gold  and 

foreign exchange reserves 

When  Hungary  adopts  the  euro,  a  safeguard  clause  should  be  inserted  in  the  newly  introduced 

Article  36(5)  on  the  confidentiality  regime  for  foreign  reserve  management  to  prevent 

infringements of specific confidentiality obligations towards the ECB and the European System of 

Central Banks in the area of foreign reserves management. 

4. 

Other outstanding concerns related to the MNB Law 

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 Council10.  

Other issues concern, inter alia, the oath taken by the MNB’s Governor and Deputy Governors and the 

single  spelling  of  the  euro  in  several  Hungarian  legal  acts.  Previous  ECB  Opinions  and  Convergence 
Reports have also pointed out the requirements for the MNB’s legal integration into the Eurosystem11 and 

that  the  recast  of  the  MNB  Law  offered  the  Hungarian  authorities  the  opportunity  to  meet  those 

requirements. 

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

Done at Frankfurt am Main, 28 June 2012. 

[signed] 

The Vice-President of the ECB 

Vítor CONSTÂNCIO 

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10  
11  

See, for example, paragraph 3.3 of Opinion CON/2010/56, paragraph 8 of Opinion CON/2011/104 and paragraph 4.3 of 
Opinion CON/2011/106. 
See paragraph 3.2 of Opinion CON/2010/91. 
See, for example, ECB Convergence Report 2012, p. 58.  

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