In the period prior to the crisis, deficiencies in the regulation and supervision of the financial system also played a role in the sharp build-up of household debt and the proliferation of foreign currency lending. The MNB’s position on the issue is that the current institutional framework and the related regulatory and supervisory powers remain inadequate to ensure the timely identification of systemic risks in the financial sector as well as the ability to solve them quickly and efficiently.
With the aim of developing a more efficient supervisory structure the MNB recommends to strengthen the macroprudential framework and to integrate the supervisory authority into the central bank. Based on international best practice and past experience in Hungary, it is appropriate that the MNB should be the institution primarily responsible for the conduct of macroprudential policy. To perform the tasks related to macroprudential policy the MNB has to provided with an adequately wide and clearly defined set of macroprudential regulatory tools. It is also reasonable to consolidate broader financial stability responsibilities and tools within the MNB. As a result, micro and macroprudential regulation as well as monetary policy will be provided with broader information, and a broader set of tools will be available to prevent the build-up of risks at individual or systemic level or to resolve crisis situations that have already occurred in a fast and efficient manner. The primary objective of the new, integrated supervision is to maintain the stability of the financial system and ensure the sustainable contribution of the financial intermediary system to economic growth. The Banking Union, with the European Central Bank at its centre, also fits into this trend.
The background paper outlining the theoretical issues regarding the strengthening of the financial supervisory function of the MNB can be reached under the following link: