National Bank of Hungary
The National Bank of Hungary (Magyar Nemzeti Bank) is the central bank of Hungary. György Matolcsy has served as the governor of the National Bank of Hungary (NBH) since March 2013.
The president of Hungary appoints the governor of the NBH to a six-year term at the recommendation of the prime minister.
The Monetary Council
The Monetary Council (Monetáris Tanács) serves as the executive body of the NBH, determining the central bank’s benchmark interest rate at monthly rate-setting sessions. The nine-member Monetary Council is composed of the NBH governor and three deputy governors as well as five “external members.” The president appoints the deputy governors and external members of the Monetary Council to six-year terms as well.
All nine current members of the Monetary Council have received appointment to the body since the Fidesz–Christian Democratic People’s Party (KDNP) alliance came to power in 2010 (source in English). Since that time, the Monetary Council has conducted expansionary monetary policy, lowering the NBH base rate to an all-time-low 0.90 percent in May 2016 (source in Hungarian). The NBH had maintained the base rate at 0.9 percent for 25-consecutive months as of May 2018.
In April 2016, Fidesz-KDNP National Assembly representatives voted to double NBH Governor Matolcsy’s pay from 2.5 million forints per month to 5 million forints per month, or about twenty times the average monthly wage in Hungary (source A, B and C in Hungarian).
The National Bank of Hungary engages many activities that are not associated with monetary policy.
At the beginning of 2014, the NBH launched a 100-million-euro Value Repository Program (Értéktár Program) intended to reacquire the works of Hungarian or foreign artists that had once been under domestic ownership though had subsequently been sold to foreign interests (source in Hungarian). The most expensive artwork that the NBH has purchased so far through this program is sixteenth-century Italian artist Titian’s painting Mary and Child with St. Paul from an unnamed Hungarian collector for 4.5 billion forints (14.5 million euros) in July 2015 (source in English). The painting is currently on display at the Hungarian National Gallery in Budapest.
Also in early 2014, the NBH launched six Pallas Athena Foundations (Pallasz Athéné Alapítvány) in order to “contribute to the common good” and “implement comprehensive social objectives” (source in Hungarian). The NBH allocated 260 billion forints (around 830 million euros) in total funding to these foundations (source in Hungarian).
On March 1, 2016, Fidesz-KDNP National Assembly representatives adopted an amendment to the law governing the operations of the National Bank of Hungary (source in Hungarian): this amendment stipulated that NBH funding allocated to the Pallas Athena Foundations had lost its public status, thereby exempting the foundations from revealing the recipients of the funding (source Hungarian).
However, President János Áder refused to sign the law, instead sending it to the Constitutional Court in order to determine its compatibility with the Fundamental Law (source in Hungarian). On March 31, 2016, the Constitutional Court declared the amendment to be unconstitutional on the grounds that NBH funding to the Pallas Athena Foundations had retained its public status (source in Hungarian).
On April 22, 2016, the six Pallas Athena Foundations published data revealing that they had allocated around 21 billion forints in NBH funding to hundreds of companies, organizations and individuals over the previous two years (source in Hungarian). According to the data, the two companies that received the greatest amount of Pallas Athena funding over this period were the construction company Magyar Építő (3.68 billion forints), which operates under the management of the future son-in-law of Orbán government oligarch Lőrinc Mészáros, and the media company New Wave Productions (613 million forints), which the opposition press has linked to the cousin of NBH Governor Matolcsy (source A and B in Hungarian).
The information showed that one of the Pallas Athena Foundations had allocated 70 million forints to a small company to publish and translate into Polish, Czech, Ukrainian and Romanian a book focusing on the struggle that NBH Governor Matolcsy had waged against the European Union and the International Monetary Fund while serving as the Orbán government’s National Economy Minister (source in Hungarian)
The Pallas Athena Foundations allocated the NBH funding without issuing a single public tender (source in Hungarian).
Last updated: May 12, 2018.