warns Hungary yet again to honor its central bank's independence
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[February 07, 2014]
FRANKFURT (Reuters) — The ECB has told
Hungary again that it must respect the independence of monetary
policymakers, saying the government cannot threaten central bankers
with dismissal if they fail to submit a wealth declaration.
The European Central Bank has been at loggerheads for some time with
the Hungarian government, which has stacked the central bank — the
MNB — with its supporters. The ECB shows no sign of backing off.
Sanctions in a draft law would allow the Hungarian central bank's
governor, deputy governors and the members of the monetary council
to be temporarily removed from office. The ECB said this could
breach EU rules.
"The ECB would like to underline that Governors and other members of
a decision-making body of a national central bank ... may not be
dismissed for reasons other than those laid down in article 14.2 of
the Statute of the ESCB," the ECB said in a legal opinion.
The article in question states that central bank heads in the
European Union may only be removed from office if they no longer
fulfill their duties or are guilty of serious misconduct.
In the legal opinion dated January 31 and published on the ECB's
Internet site on Thursday, the ECB also repeated its criticism of
Hungarian legislation regarding the prohibition of monetary
financing of the government by the central bank and the appointment
process of central bank policymakers.
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The Hungarian central bank's rate-setting panel is already made up
entirely of members picked by Prime Minister Viktor Orban or his
ruling Fidesz party.
The new appointments have been made since December 2012, when ECB
President Mario Draghi told a conference in Budapest that the
central bank must remain independent to be credible.
Hungarian Deputy Governor Julia Kiraly resigned last April, saying
that by firing seasoned staff and changing procedures the central
bank was risking long-term damage to the economy of Hungary, whose
government is the most indebted in central Europe.
(Reporting by Sakari Suoninen; editing
by Ruth Pitchford)
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