BUDAPEST — Gyorgy Matolcsy, the new governor of Hungary’s central bank, tightened his grip on power during his first day in office Monday, issuing new rules that curb the powers of the bank’s deputy governors.
The bank’s Web site indicated that Mr. Matolcsy issued new articles of association on Feb. 28, when he was still the government’s economy minister, requiring that deputy governors represent the bank only jointly with a new chief director. The deputy governors previously had the right to represent the bank in their own field of expertise.
Prime Minister Viktor Orban on Friday put Mr. Matolcsy in charge of the bank, choosing him over a critic of the prime minister’s go-it-alone economic policies. The appointment is seen as Mr. Orban’s latest move to increase the Fidesz Party’s influence over independent state institutions.
Two of the three deputy governors at the bank were appointed by a previous Socialist-dominated administration, in contrast to the rest of the bank’s policy council, who were nominated by the Fidesz majority in Parliament.
Mr. Matolcsy, the architect of a government policy that has seized private-sector assets for the state and increased taxes on big businesses, will also have direct rights over the hiring, dismissal and pay of all central bank employees and can delegate this power to the new chief director.
Investors fear the appointment will lead the bank to take risky steps with monetary policy to lift the recession-hit economy, which could threaten the country’s already-volatile currency, the forint.
During questioning in Parliament on Friday, Mr. Matolcsy said he supported “conservative, responsible” monetary policy. He said the bank would stay independent and would examine new tools to spur economic growth.
But he added that it must strive for a “strategic partnership” with the cabinet, while also maintaining price stability.
Mr. Orban also nominated a third deputy governor, Adam Balog, to the bank when he appointed Mr. Matolcsy on Friday. In addition, parliamentary documents showed that the economic committee on Monday would hold a confirmation hearing for a new nominee, Gyula Pleschinger, state secretary at the Economy Ministry, to the central bank’s rate-setting Monetary Council.
Article source: http://www.nytimes.com/2013/03/05/business/global/hungarys-new-central-bank-chief-tightens-grip.html?partner=rss&emc=rss
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