Hungary Central Bank governor György Matolcsy pats himself on the back

June 3, 2015


If Hungary central bank governor György Matolcsy has one thing in common with his boss and benefactor, Prime Minister Viktor Orbán, it is his uncanny capacity for self praise.  That and his tendency to see the world through the lenses of his own politically and ideologically fueled economic beliefs.

At an event held on Monday promoting his new book “A Changing World” Matolcsy proclaimed that the world financial crisis of 2008 marked the failure of neoliberal economics.  Since then politics had reassumed its role in commanding the economy, the state had resumed the role of commanding the markets, and the government had resumed the role of commanding the banking sector.  At least in Hungary.

Matolcsy’s book is a collection of dialogues featuring personalities he calls “Hungary’s musketeers”, such as National Public Service University professor Csaba Lentner, Chamber of Hungarian Trade and Industry president László Parragh and president of the Hungarian banking association Mihály Patai.

Matolcsy says that unlike others these three men have protected Hungary in three areas: their own professional areas; in economic theory, representing industrial interests; and in work in the banking sector.

Matolcsy said people may think it is natural for people to want to defend Hungary but this is not the case. He said there are people who constantly attack the “Hungarian model” and its pioneering methods of successful crisis management. He lists three such people as being former central bank governor Péter Ákos Bod, former minister of economy Attila Chikán and former head of Hungary’s Central Statistical Authority (KSH) Tamás Mellár, who made a name for himself more recently denouncing Fidesz think-tank Századvég as a money-laundering operation.

An implacable critic of the economic policies of the second and third Orbán governments, Chikán served as minister for economy from 1998-1999 during the first Fidesz government of 1998-2002.  He was succeeded by Matolcsy (1999-2002) who returned to the post in 2010 as the author of Hungary’s highly touted unorthodox economic policies.

In 2012 Matolcsy was appointed governor of Hungary’s central bank, a controversial decision Orbán acknowledged as “risky” in a speech delivered last Friday (although at the time the prime minister insisted Matolcsy was the only man for the job).

Matolcsy said there are also people who subjected Hungary to shock therapy in the 1990s and sent the country down the path that later resulted in it needing crisis management.

If all of Hungary’s economists would be like the three people he praised in his book, Matolcsy said, Hungary’s last twenty-five years would have turned out differently.

He said Hungary is wrapping up a successful five-year crisis management period. This period had started with the special banking taxes and closed with the government’s conversion of foreign currency-denominated loans.

Matolcsy said Hungary would not have been able to manage its way through the crisis successfully if it had followed the orthodox economic policies recommended by the International Monetary Fund (IMF) and the European Union.

With regard to the adoption of the euro, he said the 1998-2002 Fidesz government had put the country on track to adopt the euro in 2007, but bungling by the ensuing Socialist governments meant that 2020 was the earliest Hungary would adopt it.

(Even if he doesn’t know much about monetarism, it is at least reassuring to know Hungary’s central bank governor knows how to read and write-ed.)

The day following the release of Matolcsy’s book the forint weakened 1.25 percent against the euro on news that the central bank planned to do away with two-week certificates of deposit and introduce three-month, fixed-interest ones instead.

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Referenced in this article:

Matolcsy bemutatta a magyar Athost, Porthost és Aramist,; 2 June 2015.