Hungary central bank changes don't go far enough: ECB
(FRANKFURT) - Recent amendments by Hungary to legislation regarding its central bank are not sufficient to safeguard the body's independence, the European Central Bank said on Thursday.
"The amended draft law still fails to address a number of previously highlighted concerns as regards the independence" of the Magyar Nemzeti Bank, the ECB said in a statement.
While the ECB "welcomes the fact that the Hungarian authorities have taken into account the ECB's earlier observations... the ECB maintains its view that the provisions of the current MNB law do not go far enough to re-establish central bank independence," it said.
In response to wide and heavy criticism about a radical shake-up of the way Hungary runs its central bank, the Hungarian parliament -- where conservative Prime Minister Viktor Orban's Fidesz party holds a two-thirds majority -- passed a new series of amendments to the draft law earlier this week.
Budapest's long-running dispute with Brussels and Frankfurt has hampered talks on a loan from the EU and the International Monetary Fund which Hungary first requested in November 2011.
Central bank independence is enshrined in European Union treaties but Orban has used his parliamentary majority to push through changes in the make-up of the decision-making bodies of the MNB, with whom he has frequently clashed over policy.
The ECB has said it is particularly concerned about proposed changes to the make-up of the MNB's decision-making bodies, including its monetary council.
Orban wants to increase the number of council members and also increase the number of deputy governors, effectively increasingly parliament's influence over the setting of interest rates.
Orban makes no secret of his dislike of MNB chief Andras Simor and ever since the prime minister came to power in April 2010, tensions have risen between the two men because Orban believes the MNB's monetary policy decisions often thwart the government's goal of boosting growth.
In its statement on Thursday, the ECB complained that Budapest's frequent amendments to its central bank legislation "contributes to an unstable basis for the operation of the MNB."
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