Euro adoption could be put on the agenda if conditions are met - Mihály Varga

He added that the direction is good, but both domestic and global developments warn that caution must continue to be exercised, with particular attention to factors affecting inflation. He emphasized that

the entire year 2024 falls within the term of the previous central bank leadership.

Varga recalled that at last December's candidate hearing, he had already expressed the view that, in addition to operating transparently, the MNB should focus on its basic mandate as defined by law, which is to achieve and maintain price stability through stability-oriented monetary policy and by maintaining a predictable investment environment.

One of the most important factors is the forint exchange rate, which is why stabilizing it is of paramount importance to us, he said, recalling that in April this year, one euro cost 410 forints, while currently it is around 390.

In order to ensure more transparent operations, new Rules of Organization and Operation were adopted following the appointment of the new central bank management. In June, the Board of Directors approved amendments to the 2025 financial plan and

reduced operating costs by 10%.

The utilization of real estate was also reviewed, as the focus on core tasks and the reduction of other activities led to a rationalization of personnel, resulting in a 15% reduction in the number of employees.

Foundations reviewed

According to Mihály Varga, they got started on reviewing how the central bank foundations work right away, the new foundation management filed the necessary reports, and the prosecutor's office is currently investigating. He also mentioned the criminal complaint that the MNB filed last week in connection with the renovation of its headquarters on Szabadság Square.

International deputy governorship

They initiated the creation of a new international vice-presidency at the MNB to ensure that international monetary policy considerations are given appropriate weight in the central bank's activities. He noted that MNB executives and experts participate in the work of more than 320 international bodies.

In its business report for 2024, the MNB also stated that 2024 was a year of inflation reduction in the Hungarian economy, with inflation falling significantly compared to 2023 and remaining in the upper part of the central bank's tolerance band for most of the year.

In response to Antal Csárdi's (independent) question about who was being investigated and how many complaints had been filed, he replied that the central bank is an independent institution and that questions regarding the ongoing investigation should be addressed to the competent authorities. The foundation has new management who are doing their job. The central bank is committed to transparent operation, which is why new management has been appointed to the foundation, making them responsible for the real estate. The goal is to dissolve the foundations, he replied, but

given the network of companies, dissolution would cause more damage, so the aim is to preserve the assets.

In response to Tamás Mellár's (Párbeszéd) question about the introduction of the euro, he said that in the short term, the state budget must meet the conditions for introducing the euro. The introduction is not decided by the central bank;

if the conditions are met, the issue can be put on the agenda.

In response to a representative's question about the central bank's profitability or losses, he said that they operate in accordance with the applicable laws.

In response to Bence Tordai's (Párbeszéd) question as to whether the Supervisory Board (FB) bears responsibility for preventing significant financial losses, he stated that the new management had ordered a review of investments and that the real estate portfolio was currently being reviewed; the SC is doing its job, and the central bank is one of the most closely monitored institutions.

In response to Ferenc Dávid's (Democratic Coalition) question as to whether supporting long-term corporate lending would place an unbearable burden on the budget, Mihály Varga said that he did not see this as a threat, as the government had already provided support for 18 corporate lending support programs.

At its meeting on Monday, the Committee adopted the draft resolution on the report by 12 votes to 4, with 1 abstention.

Cover photo: MTI Fotó/Róbert Hegedűs