Press release : Governor disagrees with the appointment of new members to the Council

Governor disagrees with the appointment of new members to the Council

The Governor of the Magyar Nemzeti Bank maintains his view that there is no need to expand the current number of Council members from nine to 13. The Council continues to function in compliance with the provisions of law. The increase in the number of Council members is unreasonably high, and it may jeopardise the Council’s smooth functioning.

Under the Central Bank Act, as amended by the Parliament in December 2004, the Prime Minister of the Republic may initiate to increase the number of Council members by four persons. However, it could have been more appropriate if the Prime Minister had used this opportunity gradually and with greater care. After Members of Parliament turned to the Court of Constitution, requesting it to repeal the Act, it could have been more reasonable to wait until the  Court passed a ruling, in order to prevent a situation in which new members could be faced with unmanageable circumstances. The views of the President of the European Central Bank and the President of the Republic of Hungary, namely that the expansion of the Council should not take place in one step but in certain intervals, should have been taken into account, ensuring that the appointment of members was not affected by political cycles. Including the new appointments, four of the Monetary Council members were appointed by the Orbán Government and nine have been appointed by the Government currently in office since 2002.

The appointments fail to comply with that provision of the effective Central Bank Act pursuant to which the Prime Minister shall request the opinion of the Governor of the MNB. The fact that the Prime Minister, while ignoring the opinion of the Governor of the MNB, notifies him of the names of the appointees one hour prior to their public announcement cannot be considered as inviting opinions.

Not on one occasion since the change of the regime has any Prime Minister initiated the appointment as members of such persons whom the Governor did not approve. There are several such persons among the current appointees. This approach sets a very bad pattern for the periods to come.

Despite conflicting views on the amendment to the Central Bank Act and on increasing the number of Monetary Council members, the Magyar Nemzeti Bank continues to do everything in its capacity to attain price stability and keep inflation low.

Budapest, 31st of January 2005.

                                                                                  Zsigmond Járai