The Hungarian National Bank (MNB) has awarded five of its own foundations HUF 200 billion (USD 837 million) to develop the teaching of what MNB Governor György Matolcsy calls its “unorthodox” methods and ideas. The sum represents 30% more than Hungary’s annual expenditure on higher education.
While the annual state budget for higher education is HUF 136.7 billion, the MNB is spending HUF 200 billion on the five Pallas Athéné foundations that were created “to support Hungarian economical and financial culture inside and outside Hungary’s borders”.
Business weekly HVG points out that while the MNB’s own capital was only HUF 465 billion in 2013, the central bank has given HUF 160 billion to the five foundations, together with luxury buildings.
Matolcsy explained the bank’s latest purchases in an exchange of emails with vs.hu news site, which is said to be owned by his cousin Tamás Szemerey.
Matolcsy, who boasted of the success of his “unorthodox economics” when he was Hungary’s minister of national economy in 2010-13, wants to teach “unorthodox and unconventional methods” that are beyond “obsolete doctrines and mistakes of the neoliberal economics school”. He emphasized that there is a need for “new institutions, new educators and a new curriculum”.
He said the money would go to a faculty of economics and finances in Kecskemét, a faculty of finances in Targu Mures, Romania, a school for doctorate studies in the Buda Castle, and a training center in Pest.
About the Pallas Athéné Foundations:
1. Pallas Athéné Domus Animae Foundation (PADA): “aims to create a scientific workshop that will serve as a platform for future generations’ economical and financial experts”. It also plans to create an English language PhD school and an exhibition hall.
2. Pallas Athéné Domus Scientiae Foundation (PADS): “aims to support the training of experts in economics, finance, and above all in banking”.
3. Pallas Athéné Domus Concordiae Foundation (PADOC): “aims to support economics education outside Hungary’s borders, especially in the Carpathian Basin”.
4. Pallas Athéné Domus Mentis Foundation (PADOM): “aims to support the education of experts in economics and finance in Bács-Kiskun county, especially in Kecskemét, and to support interdisciplinary investigations”.
5. Pallas Athéné Geopolitical Foundation (PAGEO): “aims to encourage the knowledge creation of geostrategy and geopolitics to describe the world’s global functioning and territorial development, and to help the economical development of Hungary’s regions and of the broader region. The foundation aims to work as a think thank”.
This might explain some of the MNB’s recent real estate acquisitions, including
– Eiffel Palace office building (for HUF 17.8 billion)
– the old Buda City Hall in Úri Street (HUF 1.85 billion), which the bank subsequently gifted to the Pallas Athéné Domus Animae Foundation
– the former headquarters of The National Association of Industrial Organizations (IPOSZ) for the Pallas Athéné Domus Scientiae Foundation (HUF 450 million)
– Kecskemét’s former hospital building (HUF 1.7 billion), for the Pallas Athéné Domus Mentis Foundation
HVG points out that the foundations afford MNB the opportunity to offer well-paid jobs to MNB leaders, former politicians and departing ambassadors, with those sitting on their Boards of Trustees receiving more than HUF 500,000 (USD 2,200) monthly.
Where the money is coming from is unclear, HVG writes. According to the law on the central bank, the MNB’s income from the penalties issued in the framework of its supervisory activity has to be spent on education and investigation. However, this amount was less than HUF 862 million (USD 3.75 million) last year and HUF 1.9 billion (USD 8.2 million) this year.
Matolcsy claimed that “the fund is not coming from taxpayers’ money but from the bank’s profits”. According to Matolcsy monetary easing has made HUF 280 billion for the Central Bank and saved the business sector another several hundred million, while state bonds yielded another HUF 300 billion in savings.
HVG writes that helping to drive MNB’s profits (on paper at least) is the fact that it has expanded the country’s HUF 4 trillion monetary base by 5%.