Gyorgy Matolcsy, who has spearheaded Hungary’s unorthodox financial policies as economics minister, will become the country’s next central bank chief, in a move by Prime Minister Viktor Orban that analysts warned could open the bank to political influence.

Mr. Orban, who has in the past described Mr. Matolcsy as his “right hand,” announced the appointment on state radio Friday, saying that he would be a stabilizing force whose government experience would help assure predictability.

“This is the least risky decision,” Mr. Orban said.

Some analysts, though, expressed fears that Mr. Orban, who has used his two-third majority in Parliament to expand his control over the judiciary and the media, was tightening his grip on the National Bank of Hungary, whose independence he has not always been able to tame under its departing governor, Andras Simor.

The government has repeatedly clashed with Mr. Simor, accusing him of not doing enough to stimulate the economy. Mr. Simor, in turn, has tried to resist pressure for a looser monetary policy and has blamed the government’s policies for helping to push the economy into recession.

As economics minister, Mr. Matolcsy’s unconventional fiscal policies, which included nationalizing private pension funds and levying special taxes on the banking, energy, telecommunications and retailing sectors, have undermined investor confidence. Some observers fear that monetary policy under Mr. Matolcsy could become in thrall to politics ahead of elections next year.

And Mr. Matolcsy, an economist who once served as Hungary’s representative at the European Bank for Reconstruction and Development in London, is not known for his diplomacy, and has sometimes unsettled financial markets. As economics minister, he has railed at the central bank’s current tight monetary policy as “catastrophic,” referred to international financial investors as “pirates” and heaped scorn on the International Monetary Fund — which extended a €20 billion, or $26 billion, aid package to Hungary in 2008.

“In my view he lacks the necessary experience to lead the bank,” said Peter Rona, an economist and senior fellow at Oxford University who was nominated by the Green Party, in the opposition, to sit on the Hungarian central bank’s supervisory board. “Being the governor of a central bank is a subtle and complicated job. My worry is that I just don’t know what to expect of him.”

Mr. Matolcsy will be replaced at the economics ministry by Mihaly Varga, 48, who has led the government’s negotiations with the I.M.F. and other international financial organizations.

Hungary is not in the euro zone and its economy is relatively small, with an estimated gross domestic product of €100 billion, a tiny fraction of Germany’s €26.4 trillion economy, for example. But problems in Hungary could infect other countries in the region.

Banks or other investors could suffer losses if Hungarian government bonds lost value. In addition, a large portion of the Hungarian banking system is owned by foreign institutions, particularly Austrian banks.

Erste Bank, based in Vienna, said Thursday that its Hungarian unit had a net loss of €55.1 million last year. The bank blamed new taxes imposed by the government as well as a law that required banks in Hungary to redeem loans that were issued in foreign currencies at a rate that favored borrowers.

As tension in the euro zone rises again because of political uncertainty in Italy and a banking crisis in Cyprus, losses in Hungary could give investors another reason to be nervous.

Addressing the economics committee in Parliament on Friday, Mr. Matolcsy emphasized that the central bank “has been and will be independent.” That point was also underlined by Mr. Orban in his radio broadcast Friday.

Zoltan Pogatsa, professor of economics at the University of Western Hungary, said concerns that Mr. Matolcsy’s appointment would solidify Mr. Orban’s power over the central bank were beside the point since the government already had a majority on the bank’s monetary committee, which sets interest rates.

Analysts said the main worries about Mr. Matolcsy were that he could prove overly aggressive in using monetary policy to devalue the forint, the Hungarian currency. That could backfire, they said, since many Hungarians hold mortgages in Swiss-denominated francs.

There is also concern among economists that Mr. Matolcsy will seek to emulate the economic stimulus known as quantitative easing used by the U.S. Federal Reserve or Bank of England — essentially, a way of pumping money into the economy. That, economists warn, could prove perilous in a small country like Hungary that cannot finance itself without foreign capital.

Dan Bilefsky reported from Paris, and Jack Ewing contributed reporting from Frankfurt.

Article source: http://www.nytimes.com/2013/03/02/business/global/selection-of-hungarian-bank-chief-raises-fears.html?partner=rss&emc=rss