The European Central Bank (ECB) has told the Hungarian government that draft legislation on the salaries of senior National Bank (MNB) officials “should be amended to comply with the principle of central bank independence” and that the MNB should be involved in the drafting process.
The government may not adjust the terms upon which the executives were appointed, and must consult the central bank ahead of any such decision, the ECB said in a statement signed by its governor Jean-Claude Trichet. The statement, issued late on Monday, was published in Hungarian and English on the ECB website.
The draft bill in question would reduce the salary of MNB governor András Simor by 75% to Ft 2 million a month. As the salaries of deputy governors and monetary council members are based on the governor’s salary, the law would also affect their remuneration, the statement noted.
Stressing that the salaries of central bank executives cannot be changed until their term ends, the ECB said “the draft law should specifically provide that such an amendment may apply only to future appointments”.
The ECB further emphasised that laws affecting the central bank should be drawn up in consultation with the MNB and with the ECB.
In addition, the ECB objected that the government had not allowed enough time for it to comment on the planned changes. The ECB received the plans on July 1 and was informed that a new law would be passed by July 19. The statement pointed out that the ECB should be consulted “at a point in the legislative process which affords the ECB sufficient time to examine the draft legislative provisions,” and that EU regulations require member states to suspend the process of adopting such legislation pending receipt of the ECB’s opinion.
The statement said, moreover, that the justification provided by the Economy Ministry cannot be considered as a matter of extreme urgency, before adding “the ECB would appreciate the Ministry for the National Economy giving due consideration to its obligation to consult the ECB in the future”.
The MNB welcomed the announcement.
Prime ministerial spokesman Péter Szijjártó said the cabinet will discuss the ECB statement at its Wednesday meeting.
How is it that the ECB thinks its opinion counts
vis-a-vis the MNB? Does the HU government now
have to consult the ECB on how it operates its
central bank? If anything, the ECB have a self
interest in seeing all central bankers extremely
handsomely paid. If the pendulum swings the other
way, it’s bound to raise questions about their
salaries too.
What’s striking here is how the average “Joe” in
HU is happy to be employed, and has been asked to
“tighten” his belt for years, but as far as the
central bank goes, these boys are “above” the
fray. I’m not sure I want people who are not
affected by the policies they create, creating the
policies.
I’m all for paying a pretty penny for extreme
skill, but are these lads worthy of their weights
in gold? Their decisions apparently didn’t combat
inflation, rather for years they created an
artificially strong currency that has lured 10000s
into forex mortgage purgatory. Why should this be
rewarded?
“their decisions apparently didn’t combat
inflation, rather for years they created an
artificially strong currency that has lured 10000s
into forex mortgage purgatory. Why should this be
rewarded?”
Yes. Just that. An artificially strong currency. And this ultimately has landed everyone in the proverbial shit.
I kept posting on this site and pol.hu about this
mistake by Simor and his cronies. Nobody listened.
Perhaps they will now?