Opinion of the European Central Bank of 26 July 2013 on the new integrated Hungarian supervisory framework (CON/2013/56)
Date: 2013-07-26
Institutions: European Central Bank
Subjects: Hungary, central bank, competence of the institution, financial stability, financial supervision, national law

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 26 July 2013 

on the new integrated Hungarian supervisory framework 

(CON/2013/56) 

Introduction and legal basis 

On 7 June 2013, the European Central Bank (ECB) received a request from the Hungarian Ministry  of 

National Economy (hereinafter the  ‘consulting authority’) for an opinion on  the draft law replacing the 
Law on the Magyar Nemzeti Bank1 (hereinafter the ‘draft law’). 

On 28 June 2013, the consulting authority informed the ECB about a further substantial amendment to the 

draft law (hereinafter referred to as the ‘amendment to the draft law’), submitted during the Parliamentary 

procedure  and  of  an  amendment  of  the  Hungarian  Constitution  to  expand  the  Magyar  Nemzeti  Bank’s 

(MNB)  role  as  defined  in  the  Constitution  to  provide  for  the  new  institutional  framework  of  financial 

supervision that will be created by 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 and the  third and sixth  indents 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  concerns  rules  applicable  to  the  MNB,  and 

contains  rules  applicable  to  financial  institutions  insofar  as  they  materially  influence  the  stability  of 

financial institutions  and markets.  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  The draft law changes the MNB’s competence and institutional framework by establishing a legal 

framework for integrated supervision of the Hungarian financial market. Currently, the Hungarian 

Financial  Supervisory  Authority  (HFSA)  supervises  credit  institutions,  capital  markets,  insurance 

markets and financial funds. 

1.2  Pursuant to the explanatory  memorandum attached to the draft law (hereinafter referred to as the 

‘explanatory  memorandum’),  the  new  provisions  are expected  to  strengthen the  macro-prudential 

1  
2  

Law CCVIII of 2011. 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
                                                           
ECB-PUBLIC 

framework in Hungary, to promote the coordination of macro- and micro-prudential policies, and to 

significantly contribute to ensuring financial stability. 

1.3  Pursuant to the draft law, the HFSA will be dissolved and its functions and responsibilities will be 

transferred  to  the  MNB  on  1  October  2013.  In  the  future,  the  MNB’s  responsibilities  will  also 

include  financial  market  supervision.  In  addition,  the  draft  law  provides  that  the  MNB  will 

furthermore  be  entrusted  with  consumer  protection  and  conducting  the  alternative  dispute 

resolution procedure currently operated by the HFSA for disputes between consumers and financial 

service providers or entities participating in the financial market. 

1.4  The amendment to the draft law makes the MNB the general legal successor to all of the HFSA’s 

rights and obligations. 

1.5  The  draft  law  names  the  MNB  as  the  entity  responsible  for  macro-prudential  policy  and  micro-

prudential supervision. Pursuant to the draft law, the new macro-prudential instruments available to 

the  MNB  will  be:  (a)  preventing  and  mitigating  excessive  credit  growth  by  defining  rules 

applicable  to  the  loan-to-value  and  the  payment-to-income  ratios  (for  loan  contracts  with  private 

individuals), as well as to the  risk weights for residential and commercial real estate lending; (b) 

regulating  the  countercyclical  capital  buffer;  (c)  preventing  and  mitigating  systemic  risks  by 

defining rules applicable to the limit of maturity mismatches between assets and liabilities, limiting 

FX mismatches between assets and liabilities, and short term liquidity requirements; and (d) setting 

up  a  systemic  risk  buffer  to  reduce the  probability  of  default  by  systemically  important  financial 

institutions. 

1.6  After  1  October  2013,  the  MNB  will  be  exclusively  authorised  to  take  administrative  decisions 

pertaining to the prudential supervision of the financial markets. 

1.7  The  draft  law  also  states  that  the  MNB  will  be  the  resolution  authority  in  Hungary,  once  the 

applicable  domestic  resolution  regime  is  adopted.  As  noted  in  the  explanatory  memorandum,  the 

Hungarian  resolution  framework  is  still  under  development,  and  the  government  wants  to  ensure 

that the framework provides for adequate separation between the MNB’s supervisory duties and its 

anticipated resolution functions. 

1.8  As acknowledged by the consulting authority and the MNB, significant organisational restructuring 

will be required to transfer these new functions to the MNB. While the Monetary Council remains 

the MNB’s main decision-making body, responsible not only for strategic decisions in regard to the 

tasks  relating  to  its  membership  in  the  European  System  of  Central  Banks  (ESCB),  but  also  for 

supervisory  and  macro-prudential  functions,  the  draft  law  provides  for  separate  operational 

decision-making  by  establishing  a  new  body  of  the MNB,  the  Financial  Stability  Council  (FSC). 

This body will be responsible for macro-prudential implementing the Monetary Council’s strategic 

decisions  related  to  the  MNB’s  supervisory  and  macro-prudential tasks,  as  well  as  for taking  the 

operational decisions related to these tasks. The Executive Board will remain the decision-making 

body responsible for the direction of the MNB’s operations. 

2 

ECB-PUBLIC 

1.9  Hungary intends to comply with the Recommendation of the European Systemic Risk Board of 22 
December  2011  on  the  macro-prudential  mandate  of  national  authorities  (ESRB/2011/3)3  by 

adopting  the  draft  law,  although  the  actual  implementation  date  will  take  place  well  after  the 

reporting deadline of 30 June 2013 prescribed by the European Systemic Risk Board (ESRB). 

2.   General observations 

In  the  context  of  Article  127(5)  of  the  Treaty,  the  ECB  has  welcomed  on  several  occasions 

institutional  frameworks  established  in  Member  States  that  recognise  the  essential  role  of  central 

banks  in  promoting  the  safety  and  soundness  of  financial  institutions  and  the  stability  of  the 

financial  system  as  a  whole.  Against  this  background,  the  ECB  welcomes  the  integration  of  the 

HFSA into the MNB, as this integrated institutional framework will improve the MNB’s ability to 

safeguard  financial  stability  and  prevent  or  mitigate  systemic  risks.  In  Member  States  with  a 

relatively  small  financial  market,  such  as  Hungary,  there  are  strong  arguments  for  concentrating 
supervisory and macro-prudential responsibilities within a single authority4. 

The ECB considers entrusting the MNB with supervisory tasks as compatible with its ESCB tasks. 

Moreover, given the Hungarian banking sector’s structural connection to that of the euro area, the 

ECB  encourages  the  Hungarian  national  legislator  to  follow  developments  in  European  Union 

legislation closely as regards the planned Banking Union. 

However, the ECB notes that the assumption of new tasks by a national central bank (NCB) in the 

ESCB  should  generally  not  infringe  upon  the  NCB’s  independent  execution  of  tasks  within  the 
ESCB framework and the MNB’s existing tasks5. Accordingly, the MNB’s performance of macro-

prudential tasks should not affect: (a) the MNB’s functional and financial independence; or (b) the 

MNB’s  performance  of  its  ESCB-related  tasks  under  the  Treaty  and  the  Statute  of  the  European 

System of Central Banks and of the European Central Bank (hereinafter referred to as the ‘Statute 
of the ESCB’)6. This should be given due consideration when formulating the provisions applicable 

to the HFSA’s integration into the MNB. 

The ECB also notes that Article 4(12) of the draft law does not specify that the MNB’s new tasks 

fall under its exclusive competence. This is inconsistent with the provisions of Articles 4(8) and (9), 

which, in the ECB’s view, are drafted to confer exclusive tasks on the MNB. 

3  
4  

5  
6  

OJ C 41, 14.2.2012, p. 1. 
See  also  paragraph  4  of  Opinion  CON/2005/39.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 
Opinion CON/2003/19. 
See paragraph 2.3 of Opinion CON/2013/30. 

3 

 
 
                                                           
ECB-PUBLIC 

3. 

Specific observations 

3.1  Transfer of new responsibilities to the MNB and the MNB’s new governance structure 

3.1.1  Frequent changes to the legal framework of the MNB; incompatibility with the Treaties 

The  Law  on  the  MNB  has  been  subject  to  frequent  changes  over  recent  years.  The  currently 

applicable Law on the MNB took effect on 1 January 2012, and it has already been amended on 

several occasions. Moreover, the draft law will be the second recast of the Law on the MNB since 

2010. The frequency of amendments to the Law on the MNB, which the ECB has criticised already 
in  its  previous  Opinions7  and  in  its  Convergence  Reports8,  creates  instability  in  the  MNB’s 

operations.  A  legal  framework  that  provides  a  stable  basis  for  the  central  bank’s  functioning  is 

essential for central bank independence. 

The Hungarian legislator has decided to address the latest changes to the MNB’s legal framework 

in respect of its new tasks by preparing a new law governing its legal status. Therefore a number of 
outstanding  issues  that  have  been  raised  in  previous  ECB  opinions9  and  Convergence  Reports 

should be addressed  as a part of the current legislative process. The Law on the MNB should be 

compatible with the Treaties and strengthen the MNB’s institutional framework. 

In particular, the views expressed in paragraphs 3.2, 3.3 and 4 of Opinion CON/2012/49 continue to 

apply as regards additional checks and balances in the procedure for appointing Monetary Council 

members,  the  rules  on  dismissal  of  Monetary  Council  members,  including  the  Governor  and  the 

Deputy  Governors,  and  the  text  of  the  oath  taken  by  the  MNB’s  Governor  and  the  Deputy 

Governors. 

In  addition,  the  ECB’s  Convergence  Report  of  May  201210  recommended  introducing  additional 
safeguards  to  the  Law  on  the  MNB11  (Articles  35(1)  and  36  of  the  draft  law)  in  relation  to  the 

monetary  financing  prohibition  and  the  requirements  for  the  MNB’s  legal  integration  into  the 

Eurosystem. 

Legal integration of the NCBs into the Eurosystem requires that national legislation be adapted to 

allow for the performance of Eurosystem-related tasks and compliance with the ECB’s decisions, 

once  the  Member  State  concerned  has  adopted  the  euro.  The  ECB’s  2012  Convergence  Report 

identifies several Hungarian legislative provisions that are incompatible with Treaty requirements, 

in particular provisions included in the Law on the MNB relating to the economic policy objectives, 

monetary  policy,  collection  of  statistics,  official  foreign  reserves  management,  payment  systems, 

issue of banknotes, appointment of auditors, financial reporting, exchange rate policy, international 

cooperation  and  the  recognition  of  the  ECB’s  power  to  impose  sanctions.  The  ECB  draws  the 

Hungarian  authorities’  attention  to  the  fact  that,  for  compliance  with  Article  131  of  the  Treaty, 

7  
8  
9  
10  
11  

See, for example, Opinions CON/2007/14, CON2008/83, CON/2010/91, CON/2011/104, CON/2012/43. 
See Chapter 6.6 of the ECB’s Convergence Report 2010, and Chapter 6.5 of the ECB’s Convergence Report 2012. 
See Opinions CON/2011/104, CON/2011/106, CON/2012/43, and CON/2012/49. 
See pages 243 to 248. 
See  Article  12(4)  of  the  Law  on  the  MNB,which  has  changed  in  the  draft  law  without  taking  into  account  the  ECB’s 
Convergence Report 2012. 

4 

                                                           
ECB-PUBLIC 

which  requires  that  Hungarian  legislation  be  compatible  with  the  Treaty  and  the  Statute  of  the 
ESCB12, relevant Hungarian legislation had to be adjusted by the date of Hungarian accession to the 

Union.  Hence,  adjustments  necessary  to  ensure  full  integration  of  the  MNB  into  the  Eurosystem 

should also be adopted as soon as possible,  while they  must enter into force on the date Hungary 

adopts the euro. 

3.1.2  Central bank independence and the monetary financing prohibition 

The  provisions  under  which  an  NCB  becomes  the  legal  successor  to  any  liabilities  of  a  specific 

supervisory authority may raise issues in regard to financial independence and compliance with the 

prohibition of monetary financing laid down in Article 123(1) of the Treaty

13

, read in conjunction 

with  Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the 
application of the prohibitions referred to in Articles 104 and 104b (1) of the Treaty14. 

The  principle  of  central  bank  independence  requires  Member  States  to  ensure  that  NCBs  have 

sufficient  financial  resources  to  perform  ESCB  or  Eurosystem-related  tasks  as  well  as  their  own 
national  tasks15.  The  tasks  transferred  to  the  MNB  should  not  affect  its  ability  to  carry  out  its 

ESCB-related tasks from an operational and financial point of view. In this respect, the new MNB 

functions  should  be  performed  in  a  manner  that  is fully  compatible  with  the  MNB’s  institutional 

and  financial  independence  and  consequently  should  not  impede  the  proper  performance  of  its 

ESCB-related tasks. 

3.1.3  Devolution of the HFSA’s assets to the MNB 

The draft law provides for the transfer of assets managed by the HFSA to the MNB on 1 October 
201316.  The  ECB  notes  that  these  assets  include  all  property,  such  as  shares  in  business 

undertakings  and  account  balances,  but  it  does  not  include  real  property  of  the  HFSA  which  is 

owned by the Hungarian State, for which the MNB will only acquire property management rights. 

The  balance  of  the  HFSA’s  accounts  will  be  transferred  to  the  MNB  for  use  at  the  MNB’s  sole 

discretion. 

3.1.4  General  succession  of  the  HFSA’s  and  Financial  Conciliation  Board’s  obligations  and  pending 

legal proceedings 

The amendment to the draft law provides that the MNB will become a general legal successor of all 

HFSA  obligations,  including,  inter  alia,  its  contractual  relationships,  pending  procurement 

procedures,  out-of-court  redress  procedures,  tax-related  administrative  procedures  as  well  as  any 

other type of legal procedure. The amendment to the draft law provides further details that all rights 

and liabilities of the HFSA resulting from pending administrative legal procedures will devolve to 

12  
13  
14  
15  

16  

See paragraph 2.3 of Opinion CON/2013/30. 
See paragraph 3.2.3 of Opinion CON/2010/33. 
OJ L 332, 31.12.1993, p. 1. 
See  the  ECB’  Convergence  Reports  and  paragraph  3.  of  Opinion  CON/2011/69  and  paragraph  2.3  of  Opinion 
CON/2012/52. 
See Articles 174 and 177 of the draft law. 

5 

                                                           
ECB-PUBLIC 

the MNB17. As a consequence, any payment obligation from a legal relationship or a requirement to 

pay  compensation  in  regard  to  any  judgment  handed  down  by  Hungarian  courts  granting 

compensation to an individual or entity challenging the HFSA’s prior decisions will be borne by the 

MNB, without subsequent recourse to the Hungarian State for reimbursement. This raises issues of 

financial  independence  and  compliance  with  the  prohibition  on  monetary  financing  laid  down  in 
Article 123 of the Treaty18. In order for the MNB to be able to perform its new supervisory tasks 

without adversely affecting its performance of other existing tasks, sufficient resources should be 

made available to it, and the HFSA liabilities, including those related to any HFSA’s supervisory 

activities undertaken prior to the effective date of the transfer of responsibilities to the MNB should 

not be transferred to the MNB. In addition, the MNB should not have to bear any financial costs or 

liabilities  related  to  any  HFSA  activities  undertaken  prior  to  the  effective  date  of  transfer  of 
responsibilities to the MNB19. 

The  ECB  would  expect  the  assignment  of  the  HFSA’s  tasks  and  powers  to  the  MNB  to  be 

accompanied by measures that fully insulate the MNB from all financial obligations resulting from 

any HSFA activities and contractual relationships in the period prior to the transfer of tasks. This 

should  include,  for  example,  the  cost  of  legal  representation  in  any  pending  or  future  legal 

proceedings in relation to the HFSA, as well as all financial obligations arising out of other legal 

relationships,  including  employment  relations  between  any  new  MNB  staff  member  and  the 
HFSA20.  It  should  also  include  any  costs  related  to  the  operations  of  the  HFSA’s  Financial 
Conciliation Board21. 

In order to comply with the monetary financing prohibition, the MNB must be insulated from all 

financial  obligations  resulting  from  the  HFSA’s  prior  activities  or  legal  relationships.  Failure  to 

amend the draft law along these lines would make the proposed arrangements in the draft law and 

the amendment to the draft law incompatible with Articles 123 and 130 of the Treaty. 

3.1.5  Financial contributions of supervised entities 

The  amount  of  supervisory  fees  is  defined  in  the  respective  law  applicable  to  the  supervised 

entities.  The  procedural  rules  and  methodology  for  payment    of  financial  contributions  to  the 

HFSA’s supervisory tasks are currently defined in decrees adopted by the President of the HFSA. 

Up until now, financial supervision in Hungary has been fully funded by market participants and 

this  financing  system  is  to  be  maintained  after  the  reform,  insofar  as  the  draft  law  provides  for 

financing  the  supervisory  tasks  transferred  to  the  MNB  by  contributions  from  supervised  entities 

17  
18  

19 

20  

21 

See Article 175 of the draft law. 
See  also  paragraph  15  of  Opinion  CON/2004/31,  paragraph  8  of  Opinion  CON/2005/39,  paragraph  3.2.3  of  Opinion 
CON/2011/46 and paragraph 4.2(d) of Opinion CON/2008/16. 
See,  for  example,  paragraph  3.2  of  Opinion  CON/2010/33,  paragraphs  3.1  to  3.4  of  Opinion  CON/2011/5,  paragraph 
2.2.5 of Opinion CON/2010/7. 
See,  for  example,  paragraph  3.2  of  Opinion  CON/2010/33,  paragraphs  3.1  to  3.4  of  Opinion  CON/2011/5,  paragraph 
2.2.5 of Opinion CON/2010/7. 
The HFSA Financial Conciliation Board is an independent body without legal personality. The HFSA provides funding 
for its operation. 

6 

                                                           
ECB-PUBLIC 

and funds transferred from the HFSA22. The ECB understands that the concrete terms applicable for 

financing  the  HFSA’s  supervisory  tasks  that  are  defined  in  decrees  adopted  by  the  HFSA’s 

President  will  continue  to  apply  in  order  to  finance  the  conduct  of these  tasks  carried  out  by  the 

MNB after 1 October 2013. 

In  order  to  ensure  the  MNB’s  financial  independence,  the  performance  of  its  new  supervisory 

functions should be financed by contributions received from supervised entities. This should cover 

all the costs involved with the transfer and fulfilment of the MNB’s new tasks. For this reason, in 

the future the MNB should be involved in determining the amount of financial contribution payable 

by  supervised  entities,  and  furthermore, the  methods  for calculating  such  contributions should be 

defined independently by the MNB, taking into account its actual costs. 

Moreover,  the  MNB’s  operational  costs  for  its  new  supervisory  tasks  should  be  separately 

identified in its accounting books, and monitored by the MNB’s internal and external auditors. 

3.1.6  The MNB’s right to hire and retain qualified staff 

As pointed out in previous ECB opinions23, when allocating specific non-ESCB related tasks to an 

NCB,  e.g.  tasks  related  to  financial  supervision  or  consumer  protection,  an  adequate  amount  of 

human and financial resources must also be allocated for these tasks, which should be carried out in 
a manner which will not affect the NCB’s operational capacity to perform its ESCB-related tasks24. 

The  draft  law  expressly  provides  that,  on  the  effective  date,  the  HFSA  will  be  dissolved,  all 
employment relationships established by the HFSA will cease to exist25, i.e. no employees of the 

HFSA will be automatically transferred to be employed by the MNB. 

The amendment  to  the  draft  law  however  provides  that  all  employees  of the  HFSA  will  become 

employees of the MNB on 1 October 2013. This provision breaches the MNB’s right to autonomy 

in  staff  matters,  as  it  does  not  enable  the  central  bank  to  make  an  exclusive  and  independent 
decision on whether to employ any former HFSA staff members26. 

At the same time, in order to provide for the smooth transfer of responsibilities and tasks from the 

HFSA  to  the  MNB,  the  MNB  should  be  allowed  sufficient  time  from  the  entry  into  force  of  the 

draft  law  to  recruit  specialised  staff  of  its  own  choice,  where  appropriate,  for  the  proper 

implementation of its new responsibilities. 

In line with paragraph 3.1.4 above, it should be ensured that, as regards staff recruited according to 

the principle of autonomy in staff matters, the MNB will not bear any financial obligations arising 

from employment relations that any new staff recruited by the MNB may have had with the HFSA 

in the past. 

22  
23  

24  
25  
26 

See paragraph 3.2.5 of Opinion CON/2010/33. 
See, for example paragraph 6.3 of Opinion CON/2006/15, paragraph 3.2.4 of Opinion CON/2010/33 and paragraph 3.5 
of Opinion CON/2011/5. 
See, for example, paragraph 3 of Opinion CON/2007/8 and paragraph 3.3 of Opinion CON/2011/76. 
Article 180 of the draft law. 
See paragraph 3.2.4 of Opinion CON/2010/33. 

7 

                                                           
ECB-PUBLIC 

3.1.7  The FSC 

The draft law establishes a new body within the MNB that will take decisions as regards macro-

prudential policy, the supervision of the financial market as well as decisions related to the MNB’s 

new role as a resolution authority, within the strategic framework set by the Monetary Council. The 

Monetary  Council  will  be entrusted  with  new  tasks  in  this  respect, i.e.  to  determine  the  strategic 

framework in relation to the MNB’s macro- and micro-prudential tasks and in relation to the tasks 

as resolution authority. The Executive Board will implement the decisions of the FSC through the 

Governor and in particular through the Governor’s decrees. 

The draft law provides for the following composition of the Financial Stability Council: the MNB’s 

Governor as chair, the Deputy Governors supervising the fundamental tasks of the MNB related to 

macro-prudential  policy  and  financial  supervision,  and  managers  appointed  by  the  Governor.  A 

representative  of  the  Minister  for  National  Economy  may  participate  in  meetings  and  additional 

experts  may  also  attend  the  meetings  of  the  FSC  upon  invitation  from  the  MNB  Governor.  The 

ECB  welcomes  that  the  right  of  external  participants  to  engage  in  discussions27  does  not  confer 

voting  rights  to  these  participants.  In  addition,  this  right  should  not  be  used  to  constrain  the 

independence of the FSC members. 

3.1.8  Legislation adopted by the HFSA President 

The Law on the HFSA currently gives the HFSA President the power to adopt secondary legislation 

to  regulate  matters  falling  within  his  competence.  For  reasons  of  legal  certainty,  this  legislation 

should continue to apply after the transfer of supervisory tasks from the HFSA to the MNB. The 

ECB  understands  that  there  is  no  provision  in  the  draft  law  that  would  prevent  the  MNB  from 

repealing  the  decrees  adopted  by  theHFSA  President  and  replacing  them  with  decrees  adopted 

independently by the MNB Governor in regard to the MNB’s new tasks. 

The ECB expects to be consulted on any draft national legislation prepared by the MNB Governor 

that  falls  within  the  ECB’s  competence,  in  accordance  with  the  provisions  of  Council  Decision 

98/415/EC. 

3.1.9  The MNB’s cooperation with other bodies 

The  draft  law  provides28  that,  as  regards  its  supervisory  tasks  described  under  Article  4(9),  the 

MNB will cooperate with international organisations to the extent detailed in bilateral agreements. 

The  MNB  will  provide  international  organisations  with  information,  if  Hungarian  legislation 
allows for the transfer of information to  such organisations. Contrary to a recent amendment29  to 

the Law on the HFSA, Article 139 of the draft law does not list the ECB and the ESCB amongst 

the  organisations  with  which  the  MNB  cooperates.  Furthermore,  the  draft  law  should  also  be 

amended  to  reflect  the  legal  obligation  to  cooperate  with  the  ESCB  and  the  ECB  in  the  field  of 

27 
28  
29  

Article 13(8) of the draft law. 

See Article 42(2) of the draft law. 
See the amendment to Article 11(1) of the Law on the HFSA incorporated in Law XCVIII of 2013 on the amendment of 
financial-related legal acts. 

8 

                                                           
ECB-PUBLIC 

statistics. Such cooperation is provided for in the first indent of Article 46.2 of the Statute of the 

ESCB. Although Regulations adopted under Article 34.1 of the Statute of the ESCB in the field of 

statistics  do  not  confer  any  rights  or  impose  any  obligations  on  Member  States  that  have  not 

adopted the euro, Article 5 of the Statute of the ESCB (Collection of statistical information) applies 

to all Member States, whether or not they have adopted the euro. Furthermore, Article 4 of Council 

Regulation  (EC)  No  2533/98  of  23  November  1998  concerning  the  collection  of  statistical 
information  by  the  European  Central  Bank30,  that  implements  Article  5.4  of  the  Statute  of  the 

ESCB, requires all Member States to ‘… organise themselves in the field of statistics and … fully 

cooperate with the ESCB in order to ensure the fulfilment of the obligations arising out of Article 5 

of the Statute’. Accordingly, Member States whose currency is not the euro are under an obligation 

to design and implement, at a national level, all measures they consider appropriate to collect the 

statistical  information  needed  to  fulfil  the  ECB’s  statistical  reporting  requirements  and  to  make 

timely  preparations  in  the  field  of  statistics  in  order  for  them  to  become  participating  Member 

States. 

3.1.10   Obligation to inform the Government about the adoption of decrees 

Performance by the MNB of macro-prudential tasks should not affect: (a) the MNB’s functional, 

institutional and financial independence; or (b) the  MNB’s  performance  of its ESCB tasks under 

the Treaty and the Statute of the ESCB. 

Article  169(4)  of  the  draft  law  requires  the  MNB’s  Governor  to  inform  the  Government  with 

respect to a decree31 that restricts certain market activities, prior to adopting that decree. The MNB 

should  also  give  reasons  for  the  adoption.  The  draft  law  does  not  provide  a  reason  why  MNB’s 

Governor has to inform the Government in advance, and this raises concerns as to possible undue 

governmental  influence  on  the  adoption  of  such  decrees.  This  would  constitute  a  breach  of  the 

MNB’s  independence  in  performing  its  macro-prudential  tasks,  which  should  be  ensured  in  line 

with Article 1(2) of the draft law. 

3.1.11  

The proposed timeline for the MNB to assume its new tasks 

Pursuant to the draft law, the MNB is to be fully functional as regards its new supervisory tasks on 
1  October  201332.  Taking  into  consideration  that  the  planned  adoption  of  the  draft  law  will  take 

place in late September 2013, the draft law does not provide for a sufficient period of time between 

the  adoption  of  the  draft  law  and  the  actual  dissolution  of  the  HFSA,  which  is  also  the 
commencement date for the MNB to perform its new tasks33. 

As  acknowledged  by  the  consulting  authority  and  the  MNB,  taking  over  supervision  is  a 

significantly  complex  task,  requiring  serious  organisational  restructuring  on  behalf  of  the  MNB, 

particularly with regard to the establishment of applicable internal regulations, the provision of the 

30  
31  
32  
33  

OJ L 318, 27.11.1998, p. 8. 
See the decree defined in Article 169(1) of the draft law. 
Article 172 of the draft law. 
See also paragraph 3.2.5 of Opinion CON/2011/46 and paragraph 3.2.6 of Opinion CON/2010/33. 

9 

                                                           
ECB-PUBLIC 

human  and  financial  resources  necessary  to  carry  out  the  new  tasks,  and  the  taking  up  of  the 

practical activities in supervising the financial markets. However, the time frame available between 

the  adoption  of  the  draft  law  and  its  entry  into  force  may  not  make  it  feasible  for  the  MNB  to 

prepare for its new tasks and  ensure the continuity of efficient supervision of the entire financial 

market  from  1  October  2013.  Continuity  of  supervision  is  necessary  to  ensure  financial  stability 

and it is essential that there is no lack of supervision for any time period due to the reorganisation 

of the supervisory structure. The ECB therefore  suggests that the consulting authority  sets a date 

after 1 October 2013 for the MNB to assume its new tasks. 

3.2  Performance of specific functions by MNB 

3.2.1  The macro-prudential aspects of the MNB’s new tasks 

The  ECB  welcomes  that  the  draft  law  entrusts  the  MNB  with  fundamental  tasks  related  to  the 

exploration and management of systemic risks. The ECB supports the design of effective  macro-

prudential policy frameworks within Member States, in line with the guiding principles set out in 

Recommendation  ESRB/2011/3.  Moreover,  the  ECB  considers  that  the  ECB  and  NCBs  should 

play a leading role in macro-prudential oversight, given their expertise and existing responsibilities 
in the area of financial stability34. 

Concerning  the  envisaged  measures  to  reduce  the  probability  of  bankruptcy  of  systemically 

important institutions, Directive 2013/36/EU on access to the activity of credit institutions and the 
prudential supervision of credit institutions and investment firms35 includes separate provisions on 
capital charges for ‘global and other systemically important institutions’36 as well as for a ‘systemic 
risk  buffer’37.  In  order  to  improve  clarity  and  ensure  legal  certainty,  the  ECB  proposes  that  the 

provisions set out in Article 34 of the draft law are brought fully in line with the relevant provisions 

of Directive 2013/36/EU, clearly separating these two types of instruments. 

Furthermore, the Hungarian legislator is recommended to consider adding additional instruments in 

the draft law that are at the disposal of national macro-prudential authorities pursuant to Directive 

2013/36/EU. 

The  above  observations  are  without  prejudice  to  the  conclusions  of  the  follow-up  assessment  of 

Recommendation  ESRB/2011/3,  which  the  ESRB  will  prepare  in  accordance  with  Article  17  of 

Regulation  (EU)  No  1092/2010  of  the  European  Parliament  and  of  the  Council  of  24  November 

2010  on  European  Union  macro-prudential  oversight  of  the  financial  system  and  establishing  a 
European Systemic Risk Board38. 

34  
35  
36  
37  
38  

See paragraph 2.1 of Opinion CON/2013/30. 
OJ L 176, 27.6.2013, p. 338. 
See Article 131 of Directive 2013/36/EU. 
See Article 133 of Directive 2013/36/EU. 
OJ L 331, 15.12.2010, p. 1. 

10 

 
                                                           
ECB-PUBLIC 

In  this  context,  the  ECB  first  notes  that  Article  4(7)  of  the  draft  law  provides  not  only  for  new 

tasks,  but  also  for  a  new  objective  for  the  MNB  to  improve  the  resilience  of  the  financial 

intermediation  system  and  to  ensure  its  sustainable  contribution  to  economic  growth  through  its 

macro-prudential policy. In line with Article 127(1) of the Treaty and Article 2 of the Statute of the 

ESCB, this objective should not prejudice the primary objective of price stability defined in Article 

3(1) of the draft law. The draft law should be adapted to reflect this. 

Moreover, in line with Article 127(1) of the Treaty and Article 2 of the Statute of the ESCB, the 

MNB’s secondary objectives should not prejudice the ESCB’s primary and secondary objectives. 

This  is  required  for  full  legal  integration  of  the  MNB  into  the  Eurosystem,  and  therefore  a 

legislative provision to this effect will need to enter into force on the date on which Hungary adopts 
the euro.39 

3.2.2  The MNB’s resolution authority function 

The draft law provides that the MNB will be designated as the resolution authority.40 In this respect 

the  ECB  understands that  the  detailed  rules  are  to be  defined in  separate  legislation.  Appropriate 

resources will have to be made available to ensure the MNB’s performance of this new task. 

As legislation detailing this new function of the MNB has not yet been prepared, the ECB is not in 

a position to assess the MNB’s ability to take on the role of a resolution authority. To ensure legal 

certainty, national legislation providing for this new function of the MNB  should be adopted in a 

timely manner. 

Furthermore, any performance by the MNB of tasks as resolution authority should not affect: (a) 

the  MNB’s  functional  and  financial  independence;  or  (b)  the  MNB’s  performance  of  its  ESCB-

related tasks under the Treaty and the Statute of the ESCB. 

Moreover,  the  ECB  notes  that  draft  national  legislation  pertaining  to  NCB  tasks  falls  within  the 

ECB’s competence and is therefore subject to the consultation requirement in accordance with the 

provisions of Council Decision 98/145/EC. 

3.2.3  The MNB’s new consumer protection function 

As  previously  noted  by  the  ECB41,  consumer  protection  is  not  included  in  the  tasks  of  NCBs 

specified  in  the  Treaty  and  the  Statute  of  the  ESCB.  However,  as  pointed  out  on  previous 
occasions42, the ECB does not consider that this task would interfere with the ESCB’s objectives 

and tasks. Pursuant to the last sentence of Article 14.4 of the Statute of the ESCB, this task would 

have to be the MNB’s responsibility, for which it would be liable. It would not be regarded as being 
part of the ESCB’s functions. The ECB understands that this task has been allocated to the MNB43 

due  to  its  overall  supervisory  responsibility  for  the  entire  financial  market.  The  task  may 

39  
40  
41  
42  
43  

See ECB’s Convergence Report of May 2012, country summary, p. 57-58. 
Article 4(8) of the draft law. 
See, for example, paragraph 3.4 of Opinion CON/2011/46 and paragraph 2.4 of Opinion CON/2012/52. 
See, for example, Opinions CON/2006/47, CON/2006/38, CON/2007/8 and CON/2007/29.  
See Articles 80 to 90 of the draft law. 

11 

                                                           
ECB-PUBLIC 

supplement MNB’s supervisory powers and thus contribute to the soundness of the financial market 

and preserve confidence in the market. 

The  allocation  of  new  powers  to  the  MNB  aims  to  ensure  the  transparency  of  financial  services 

transactions  and  products  offered  by  entities  subject  to  its  supervision.  This  allocation  could 

improve  the  clarity  and  efficiency  of  the  national  regulatory  framework  while  ensuring  adequate 

consumer  protection  and  a  level  playing  field.  Prudential  supervision  and  investor/consumer 

protection are intended to safeguard the soundness of the financial market and preserve confidence 

in the marketplace. 

However, as previously stated by the ECB in relation to other NCBs, it is important to ensure that 

prudential  supervision  and  investor/consumer  protection  are  adequately  and  equally  emphasised 
and  that  appropriate  resources  are  available  to  ensure  their  performance44.  When  granting  these 

additional powers to the MNB, care must be taken to ensure that the MNB’s operational capacity to 

carry out ESCB-related tasks will not be affected from an operational as well as financial point of 

view, due to any additional tasks introduced by the draft law. 

3.2.4  The MNB’s responsibilities in the area of EMIR, SEPA and the supervision of negotiable vouchers 

The ECB has recently been consulted by the Hungarian authorities45 as regards the amendment of 

the  current  Law  on  the  MNB  that  needed  to  take  place  in  order  to  implement  Regulation  (EU) 

No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, 
central  counterparties  and  trade  repositories  (EMIR)46,  as  well  as  with  Regulation  (EU) 

No 260/2012  of  the  European  Parliament  and  of  the  Council  of  14  March  2012  establishing 
technical and business requirements for credit transfers and direct debits in euro (SEPA)47.  

This  latest  amendment  of  the  Law  on  the  MNB  also  introduced  provisions  as  regards  the 

supervision  of  the  activities  and  enterprises  that  issue  and  redeem  negotiable  vouchers  not 

constituting legal tender. Consequently, the Hungarian legislators should consider including in the 

draft law also provisions on the MNB’s role as the competent authority for  the above EMIR and 

SEPA  provisions,  including  for  registering  and  supervising  entities  issuing  such  negotiable 

vouchers. 

3.2.5  Provisions of the draft law on banknotes and coins 

Article 4(2) and Articles 23 to 26 of the draft law establishing the MNB’s exclusive right to issue 

banknotes and coins do not recognise the Council’s and the ECB’s powers in this field. 

In  addition,  the  draft  law  should  indicate  whether  the  references  to  ‘banknotes  and  coins’, 

‘Hungarian  and  foreign  means  of  payment’  and  ‘legal  tender  in  circulation’  also  cover  euro 

banknotes  and  coins.  In  general,  these  references  should  mainly  encompass  Hungarian  currency 

with legal tender status. If foreign means of payment are also meant to cover euro banknotes and 

44  
45  
46  
47  

See Opinions CON/2006/47, CON/2006/38, CON/2007/8 and CON/2007/29. 
See Opinion CON/2013/40 
OJ L 201, 27.7.2012, p. 1, Articles 14(1), 15(1), 18, 20, 2021(1), 35, 41(1), 49(1), 54(1). 
OJ L 94, 30.3.2012, p. 22, Article 10. 

12 

 
                                                           
ECB-PUBLIC 

coins, the ECB suggests specifying in the draft law that the relevant provisions of Union law apply 

and no national legislation can substitute for them. For legal certainty and consistency reasons, all 

of the above references should be defined. 

Article 23(9) of the draft law would benefit from an amendment clarifying that applicants seeking 

exchange  of  banknotes  denominated  in  Hungarian  currency,  which  are  damaged  due  to  the 

activation  of  security  devices  must  prove  that  they  are  the  owners  or  otherwise  authorised 

applicants  acting  in  good  faith,  who  have  been  victims  of  attempted  or  actual  criminal  activity 

leading to damage to these banknotes. This amendment would avoid the risk of allowing the actual 

criminal to request the MNB to exchange such damaged banknotes by simply presenting an official 

document certifying the cause of the damage, as required under Article 23(9) of the draft law. 

To  ensure  a  level  playing  field  for  means  of  payment  denominated  in  all  currencies,  the  phrase 

‘including means of payment denominated in euro’ should be inserted into Article 24(4) and (5) of 

the  draft  law  after  the  words  ‘foreign  means  of  payment’.  This  insertion  is  necessary  as  it  is 

understood  that  the  reference  to  ‘foreign  means  of  payment’  does  not  always  include  euro 
banknotes and coins in its scope48. 

Finally, the ECB recommends modifying Article 26(2) of the draft law to clarify that reproductions 

of euro banknotes and coins, including medals and tokens similar to euro coins, must comply with 

the relevant requirements of Union law, instead of referring to alterative reproduction requirements 

laid down by the MNB’s Governor. 

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

Done at Frankfurt am Main, 26 July 2013. 

[signed] 

The President of the ECB 

Mario DRAGHI 

48  

See for instance Article 24(3) of the draft law. 

13