Need to Strengthen Cooperation of Central Banks

National Bank of Hungary (MNB) governor Mihály Varga underscored the need to strengthen cooperation among central banks to support financial stability amid an increasingly fragmented world, opening the premiere edition of the Budapest Financial Summit on Wednesday.

Although local challenges may vary from economy to economy, the need for stability, resilience and efficient institutions is universal, the governor said.

"At a time when fragmentation is on the rise in various dimensions in the global economy, there is a growing need for platforms that promote an exchange of ideas rather than decoupling, making a declaration of cooperation instead of isolation," he added.

Mihály Varga pointed to the deteriorating effect on predictability of technological advances, geopolitical tensions, the energy crisis and the challenges of sustainability and said central banks needed to get used to that unpredictability on a permanent basis. In that environment, he added that central banks' primary task remained maintaining price stability, while preserving financial stability was also important.

He said cooperation was key to the shared goal of reducing costs and noted the NBH's recently launched partnership with the Hungarian Chamber of Commerce and Industry (MKIK) to gauge outlooks. He also cited the NBH's AI-based banking fraud detection system as an example of adapting to technological advances. The system has detected over 7,000 attempts at fraud, he added.

In an address to the conference, Fatih Karahan, the governor of the central bank of Turkey, acknowledged the contribution of the integration of the global economy to disinflation, but said economic ties had become tools of geopolitical competition. From the perspective of monetary policy, he said that meant supply shocks were becoming more frequent and more persistent, but a response to first-round price effects was not always necessary.

The MNB launched the Budapest Financial Summit to serve as a bridge for a structured exchange between Western and Eastern economic and financial perspectives.