1. The MNB suggests that Article 46 (10) of the MNB Act should be amended rather than repealed.
Detailed reasons:
With a view to conformity with the other provisions of the MNB Act, the MNB suggests that the provision in question should be amended rather than repealed. The purpose of the amendment is that the Act should clearly provide for both the grounds for dismissal of the Monetary Council (MC) members and the persons authorised to revoke their appointments. It is proposed that the grounds for dismissing members of the MC should be provided for with reference to the Statute of the European System of Central Banks and of the European Central Bank (hereinafter: the ‘Statute’).
The following text is proposed by the MNB:
‘Members of the Monetary Council under Article (4)(a) and (b) and under Article (4)(c) may be dismissed respectively by the President of the Republic and Parliament only [if]for the grounds pursuant to Article 14.2 of the Statute [such members of the Monetary Council fail to meet the conditions required in order to carry out their duties or are guilty of serious misconduct].’
2. It is proposed that Articles 46(12) and 47(5) of the MNB Act, entering into force from 1 January 2013, should be amended.
Detailed reasons:
In accordance with Article 11.1 of the Opinion of the ECB CON/2011/104, Articles 46(12) and 47(5) of the MNB Act currently in effect provide that the right to bring an action before the Labour Court is without prejudice to the jurisdiction of the Court of Justice of the European Union. As from 1 January 2013, however, such provisions will be amended, yet the provisions in question have not been amended in accordance with the opinion of the ECB.
In order to eliminate this contradiction, the following text is proposed by the MNB:
‘(1) Article 46(12) of this Act shall be replaced by the following:
‘(12) The proposal for dismissal under Article (11) shall be forwarded to the member of the Monetary Council concerned, who may bring the case before the Administrative and Labour Court pursuant to the provisions of the Labour Code (hereinafter: ‘LC’). The right to take action before the Court pursuant to the provisions of the LC shall not prejudice the jurisdiction of the Court under Article 14.2 of the Statute.’
Article 47(5) of this Act shall be replaced by the following:
‘(5) The proposal for dismissal by the Prime Minister under Article (4) shall be forwarded to the Governor of the MNB; the latter may bring the case before the Administrative and Labour Court pursuant to the provisions of the LC. The right to take action before the Court pursuant to the provisions of the LC shall not prejudice the jurisdiction of the Court under Article 14.2 of the Statute.’
The opinion of the MNB concerning the increase of the number of members of the Monetary Council, the expansion of its sphere of authority and ensuring the independence of the central bank (none of which is part of the amendment in question) has not changed.
- The credibility of monetary policy is reduced by the fact that the institutional and legal framework of monetary policy decision making was repeatedly modified by the MNB Act in December 2011. The MNB disagrees with the increase in the number of the members of the Monetary Council and with the fact that the law enables the appointment of another Deputy Governor. In the opinion of the MNB, the long-term independence of the MC would be reinforced if its members were appointed, and therefore their term of office expired, at different times. Similarly, it is proposed that Article 46(11) of the law should include the right of the Governor of the MNB to deliver an opinion on the candidates for membership of the MC. ?
Detailed reasons
The credibility of monetary policy can be achieved most efficiently by a central bank operating in a stable institutional and legal framework. Therefore, in the opinion of the MNB, the fact that the MNB Act has repeatedly amended the institutional and legal framework of monetary policy does not contribute to the credibility of monetary policy. In addition to the above, the very reason why the 2007 amendment of Act LVIII of 2001 on the MNB set the number of members of the Monetary Council between 5 and 7 was that such number is considered optimal in countries of comparable size in international comparison and the findings of international studies on the number of the members of monetary decision-making bodies. The addition of further members as provided for in the MNB Act points in the opposite direction from the former course of the changing of the institutional framework.
The MNB considers that the appointment of a third Deputy Governor is unjustified. Managing to operate effectively since 2007, the MNB has fully complied with its statutory duties with two Deputy Governors. The necessity of a third Deputy Governor is not justified by the MNB Act authorising the MNB to issue Decrees in order to provide for the required measures with a view to preventing, mitigating or eliminating systemic risks. Finally, the appointment of the third Deputy Governor is not justified by cost-efficiency considerations either.
2. The expansion of the MC’s scope of authority is counter-productive and unwarrantable in terms of both management and efficiency reasons.
Detailed reasons
For both efficiency and practical considerations, the activity of a body heading an institution and consisting of a large number of members should be limited to the making of the most important strategic decisions. Its authorisation to decide on certain operational management issues is considered inappropriate for general management reasons. The MNB disagrees with the MNB Act providing that the determination of the competence of the Deputy Governors and the decisions on the execution of strategic decisions should fall under the authority of the MC. For the same reason, the MNB disagrees with the Act providing that the decision on the method of communication related to the tasks falling into the scope of authority of the MC should fall under the authority of the MC.
3. The regulation of the remuneration of the Governor and the Deputy Governors of the MNB is in breach of central bank independence and is incompatible with EU legislation.
Detailed reasons
The amendment to the salaries of the decision-makers of the MNB during the term of office of the decision-makers of the Magyar Nemzeti Bank without having consulted the MNB is in breach of central bank independence, and therefore it is incompatible with both the Treaty on the Functioning of the European Union and the MNB Act.
The amendment of the salary of the decision-makers of the MNB is also a discriminative measure, as the decision-makers of the MNB are neither public employees nor civil servants but managers of a company in public ownership. The provisions introducing a cap on the salaries are not applicable to the managers of other state-owned banks or companies.