After a fiscal and exchange rate crisis in 2006, Andras Simor could hardly have been appointed governor of the National Bank of Hungary (MNB) at a more difficult moment. Not that this seems to have disconcerted him, as he immediately carried out a full-scale management reshuffle. Thankfully, this did not provoke much conflict either at the organisational or the personal level, Simor recalls
“A full-scale management change took place at the central bank, since not only the Governor but Deputy Governors were also replaced. Moreover, an entirely new management were set up in a different structure and the Central Bank Act was also amended."
And he is pleased with the results. “Co-operation between staff and the Monetary Council (MPC) has deepened substantially recently. [...] there is a very lively and active communication between us. This does not mean that we agree on everything, but it does mean that the MPC have come to know the underlying motivations of the staff's standpoint and the MNB staff have also learned more about the MPC's way of thinking."
This, he added, helps the central bank to pursue a well-established “more balanced and more efficient monetary policy".
The Governor stressed it was “not a little achievement" that the bank has managed to avoid getting involved in any kind of conflict with political overtones.
He said that while during his eight months in office co-operation between central bank and government officials have been “very fair", with both parties lending an ear to the other and respecting each others' opinion “even if we do not have an agreement on everything."
“This does not mean there will not be situations in the future when the MNB will need to voice a harsher opinion, which could evoke disapproval from one side or the other."
As an example for these possible conflict areas Simor mentioned the government's public finance package.
“We have said repeatedly that the public finance package is close to our heart - not necessarily the wording of the law but its concept. This country needs a law like this and we very much hope that Parliament will be able to pass it with a two-thirds majority."
If it failed to do so, Simor said, the central bank could find itself in a position where it must voice its criticism “even if it affects one or another political side unfavourably".
There is one matter than already causes Simor profound concern. The MNB will not be able to achieve price stability by 2008, he acknowledged.
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