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Hungary tells EU no central bank merger until 2013

01 January 2012, 01:29 CET
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(BUDAPEST) - Hungary's Prime Minister Viktor Orban has assured Brussels no merger of the central bank and regulatory authority will take place before 2013, as part of much criticised reform plans adopted Friday.

"The government does not intend to use the option to merge the central bank with the market regulator" until current central bank governor Andras Simor's mandate expires, Orban wrote in a letter to European Commission president Jose Manuel Barroso, government spokesman Peter Szijjarto said late Friday.

Simor's term of office ends in March 2013.

Despite international concern, Hungary went ahead Friday with its adoption of central bank reforms that drew sharp criticism from the EU, the European Central Bank and the International Monetary Fund for increasing the government's influence over monetary policy.

The law adds more political appointees to the central bank's monetary-policy-setting committee and could see the bank disappear as a separate institution altogether with its governor demoted to deputy position.

In his letter, Orban repeated that the controversial law "is in all aspects in harmony with European legislation" and that he was ready to consult Brussels "to clarify any details."

Barroso had voiced "serious doubts" earlier this month about the compatibility of the law with the European Union treaty, but Orban turned down his call to postpone adoption of the text.

The independence of national central banks is a key condition to enter the eurozone, of which Hungary is not yet a member.

The disagreement also comes at a time when Budapest is seeking a 15-20 billion-euro ($20-25 billion) credit line from the EU and the IMF.


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Document Actions

IMF money is needed to make it to 2013

Posted by Joseph Novak at 31 December 2011, 19:32 CET
Just the day after passing the infamous law about the overtake of the Central Bank, Orban promises to wait... Guess what! IMF money is needed to make it to 2013.