EU insists on Hungary’s Central Bank independence

EU executive José Manuel Barroso has called on Hungarian Prime Minister Viktor Orbán to ensure that the nation’s Central Bank remains independent despite a controversial reform that gives the government more control over the bank.

European Commission spokesman Olivier Bailly said that the President of the Commission and the Prime Minister had exchanges during the Christmas break and New Year break on the law adopted on December 30. The new legislation adds more political appointees to the Central Bank’s monetary-policy-setting committee and could see the bank disappear as a separate institution altogether with its governor demoted to deputy position.

Despite wide international concern, Hungary went ahead last month with the adoption of the Central Bank law that drew sharp criticism from the European Union, the European Central Bank and the International Monetary Fund for increasing the government’s influence over monetary policy.

The disagreement came at a time when Hungary is seeking a euro credit line of EUR 15-20 billion from the EU and the IMF. The two organizations already withdrew from the preliminary talks in December in protest at the constitutional reform, and the EC spokesman now said no decision had yet been taken on whether to resume talks, scheduled for this month.