Opinion of the European Central Bank of 31 January 2014 on the Magyar Nemzeti Bank (CON/2014/8)
Date: 2014-01-31
Institutions: European Central Bank
Subjects: Hungary, central bank, conflict of interest, financial supervision, institutional activity, national law, wealth

EN  

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 31 January 2014 

on the Magyar Nemzeti Bank 

(CON/2014/8) 

Introduction and legal basis 

On 3 January 2014, the European Central Bank (ECB) received a request from the Hungarian Ministry of 

National  Economy  (hereinafter  the  ‘consulting  authority’)  for  an  opinion  on  a  draft  law  amending  the 
Law on the Magyar Nemzeti Bank1 (hereinafter the ‘draft law on the Magyar Nemzeti Bank’), and a draft 

law  on  fiduciary  asset  managers  and  the  rules  governing  their  activities  (hereinafter  the  ‘draft  law  on 

fiduciary asset management’). 

On 9 January 2014, the ECB received an additional request for consultation from the consulting authority 

on a draft law amending several legal acts, including the Law on the Magyar Nemzeti Bank, as regards 

the rules applicable for the declaration of wealth by certain officials of the Magyar Nemzeti Bank (MNB) 

(hereinafter  the  ‘draft  law  on  declaration  of  wealth’).  As  this  consultation  request  also  concerns  an 

amendment of the Law on the Magyar Nemzeti Bank, the ECB has decided to merge the two consultation 

requests and adopt one opinion concerning all of the draft provisions sent for consultation. 

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 laws concern rules applicable to the central bank. 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 laws 

1.1  Pursuant to the Law on the Magyar Nemzeti Bank, the Hungarian Financial Supervisory Authority 

(HFSA)  was  dissolved  and  its  functions  and  responsibilities  were  transferred  to  the  MNB  on 

1 October  2013.  From  this  date,  the  MNB  became  the  entity  not  only  responsible  for  macro-

prudential  policy,  but  also  for  micro-prudential  supervision  of  the  entire  financial  market.  As  a 

result, the MNB has been exclusively authorised to take administrative decisions pertaining to the 

prudential  supervision  of  the  financial  markets  since  that  date.  According  to  the  explanatory 

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Law CXXXIX of 2013 on the Magyar Nemzeti Bank. 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
 
                                                            
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memorandum  attached  to  the  draft  law  amending  the  Law  on  the  Magyar  Nemzeti  Bank,  an 

amendment of the recently adopted Law on the Magyar Nemzeti Bank has become necessary with 

respect  to:  (a)  improving  the  Law  on  the  Magyar  Nemzeti  Bank  based  on  practical  experience 

recently  gained  from  applying  its  provisions  in  connection  with  the  MNB’s  financial  supervisory 

tasks;  (b)  providing greater  flexibility  in  the  Financial  Stability  Council’s  (FSC)  decision-making 

procedure; and (c) ensuring more efficient enforcement of the payment of the MNB’s supervisory 

revenues. To this end, the draft law amending the Law on the Magyar Nemzeti Bank provides that 

the  adoption  of  certain  decisions  under  FSC  administrative  procedures  may  be  delegated  to 

competent MNB managers. It also provides for (a) the National Tax and Customs Administration of 

Hungary to collect unpaid supervisory fees and fines imposed by the MNB for and on behalf of the 

MNB; (b) the MNB’s Governor or the person designated by him to become a member of the Board 

of  the  Public  Procurement  Authority;  (c)  the  MNB  to  become  the  sole  owner  of  the  Credit 

Institution  Liquidator  Non-profit  LLC;  (d)  the  amendment  of  the  provisions  applicable  to  legal 

remedies  against  the  MNB’s  administrative  decisions;  and  (e)  the  possibility  for  the  MNB  to 

provide payment services for its employees, limited to cash payments, from their accounts managed 

by the MNB. 

1.2  The draft law on fiduciary asset management regulates the legal status and activities of fiduciary 

asset managers. According to an amending proposal that is to be submitted to this draft law during 

the  Hungarian  parliamentary  procedure,  the  MNB,  as  the  Hungarian  financial  supervisory 

authority, is to be given authority to grant licences to entities carrying out such activities as well as 

to keep records with regard to such entities. 

1.3  The  draft  law  on  the  declaration  of  wealth  defines  sanctions  against  the  MNB’s  Governor,  the 

Deputy  Governors,  the  other  Members  of  the  Monetary  Council  and  the  members  of  the 

Supervisory  Board  if:  (a)  they  refuse  or  fail  to  submit  their  declaration  of  wealth  by  the  given 

deadline; or (b) they intentionally include substantively false data in their declaration. 

2. 

Specific Observations 

2.1  The  Law  on  the  Magyar  Nemzeti  Bank  has  been  subject  to  frequent  changes  over  recent  years, 

which also resulted in it having been recast twice since 2010. The currently applicable Law on the 

Magyar Nemzeti Bank only took effect on 1 October 2013, and it is already subject to change. The 

frequency of amendments to the Law on the Magyar Nemzeti Bank, which the ECB has criticised 
in  its  previous  opinions3  and  in  its  Convergence  Reports4,  creates  instability  in  the  MNB’s 

operations. A legal framework that provides a stable basis for a central bank to function is essential 

for central bank independence. 

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4  

See,  for  example,  Opinions  CON/2007/14,  CON2008/83,  CON/2010/91,  CON/2011/104,  CON/2012/43  and 
CON/2013/56. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
See Chapter 6.6 of the ECB’s Convergence Report 2010, and Chapter 6.5 of the ECB’s Convergence Report 2012. 

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2.2  The draft amendments summarised in section 1 do not warrant further observations from the ECB. 

At the same time, the ECB notes that there are still outstanding issues concerning the Law on the 

Magyar  Nemzeti  Bank,  which  should  have  been  addressed  in  one  of  the  numerous  amendments 

described  above.  Therefore,  the  Hungarian  legislator  should  take  the  opportunity  that  the  current 

legislative  process  offers  to  address  the  issues  that  the  ECB  has  already  raised  in  relation  to  the 

Law on the Magyar Nemzeti Bank in  its opinions and in the Convergence Reports referred to in 

paragraph 2.1, including the following issues: 

(a)  Additional safeguards should be introduced into the Law on the Magyar Nemzeti Bank5 in 
relation  to  the  monetary  financing  prohibition6;  the  ECB,  in  its  Convergence  Report,  also 

pointed out other provisions of the Law on the Magyar Nemzeti Bank that are incompatible 

with  the  provisions  of  the  Statute  of  the  European  System  of  Central  Banks  and  of  the 

European Central Bank (hereinafter the ‘Statute of the ESCB’). 

(b)  There should be a provision covering: (i) additional checks and balances in the procedure for 

appointing  Monetary  Council  members,  and  the  rules  providing  for  the  smooth  and 

continuous  functioning  of  the  Monetary  Council  in  case  of  termination  of  office  of  the 

Governor;  and  (ii)  changing  the  text  of  the  oath  taken  by  the  MNB’s  Governor  and  its 
Deputy Governors7. 

(c)  There should be provisions: (i) as regards the prohibition of monetary financing in relation to 
the  MNB’s  general  succession  to  the  HFSA’s  obligations  and  pending  legal  proceedings8; 
and (ii) the MNB defining the financial contribution of supervised entities9. 

2.3  Article  157  of  the  Law  on  the  Magyar  Nemzeti  Bank  defines  the  rules  with  regard  to  the 

submission  of  declaration  of  wealth  by  MNB  officials.  The  draft  law  on  declaration  of  wealth, 

which  further  amends  the  Law  on  the  Magyar  Nemzeti  Bank,  provides  that:  (a)  as  long  as  the 

MNB’s  Governor,  Deputy  Governors,  members  of  the  Monetary  Council  and  members  of  the 

Supervisory Board do not comply with their obligation to submit a declaration of wealth, they will 

be  prohibited  from  carrying  out  their  duties  and,  as  a  consequence,  they  will  not  be  entitled  to 

receive their remuneration; and (b) a conflict of interest as defined in Article 152-156 of the Law on 

the Magyar Nemzeti Bank has to be formally established on their behalf, should they fail to fully 

comply with the obligations for submitting a declaration of wealth or if they submit substantively 

false data or facts. 

2.4  Article 3 of the draft law on declaration of wealth inserts a new paragraph 1a in Article 157 of the 
Law  on  the  Magyar  Nemzeti  Bank.  The  ECB  has  noted  in  its  Opinion  CON/2009/6410  that 

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See  Article  12(4)  of  the  Law  on  the  Magyar  Nemzeti  Bank  ,  which  has  changed  in  the  draft  law  without  taking  into 
account the ECB’s Convergence Report 2012. 
See pages 243 to 248 of the ECB’s Convergence report 2012. 
See paragraphs 3.2 and 3.3 and paragraph 4 of Opinion CON/2012/49. 
See paragraph 3.1.2 of Opinion CON/2013/56. 
See paragraph 3.1.5 of Opinion CON/2013/56. 
See paragraph 3.3. 

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sanctions related to non-compliance  with the obligation of submitting wealth declarations  are not 

generally prohibited, provided that certain safeguards apply. The sanction provided for in Article 3 

in  effect  allows  the  MNB’s  Governor,  Deputy  Governors  and  the  members  of  the  Monetary 
Council to be temporarily11 removed from office for grounds other than those pursuant to Article 

14.2  of  the  Statute  of  the  ESCB.  The  ECB  would  like  to  underline  that  Governors  and  other 

members  of  a  decision-making  body  of  a  national  central  bank  (NCB)  who  are  involved  in  the 

performance of ESCB-related tasks may not be dismissed for reasons other than those laid down in 

Article 14.2 of the Statute of the ESCB. 

2.5  As regards the establishment of a possible conflict of interest, the insertion of a new paragraph 3 in 

Article 157 of the Law on the Magyar Nemzeti Bank is understood by the ECB to be used to oblige 

the  Governor,  the  Deputy Governors,  the  members  of  the  Monetary  Council and  the  members  of 

the Supervisory Board of the MNB to submit an accurate declaration of wealth. As regards this new 

paragraph 3, the ECB notes that the declaration of the conflict of interest should: (a) clarify whether 

this establishment involves only a presumption that a conflict of interest arises; (b) define the extent 

of the conflict of interest in such cases; and (c) provide for a legal remedy against such a decision. 

Nevertheless,  the  ECB  notes  that  in  order  to  dismiss  the  Governor  and  other  members  of  any 

NCB’s decision-making bodies who are involved in the performance of ESCB-related tasks, one of 

the two grounds for dismissal specified by Article 14.2 of the Statute of the ESCB have to apply. 

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

Done at Frankfurt am Main, 31 January 2014. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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See the insertion of a new paragraph (1a) to Article 157 of the Law on MNB allowing for the suspension of the right of 
the members of the Monetary Council of the MNB to exercise their duties. 

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