New central bank regulations have been approved, cutting short talks between the International Monetary Fund and the European Union. Now, Hungary is also less likely to obtain a bailout.
In Budapest, parliament has expanded the Monetary Council, opened a position for an additional vice president, and stripped current President Andras Simor of his right to name deputies. A law, which was approved on December 31st, approved the option of demoting a central bank president if the institution is teamed with the financial regulator.
“The approval of the central bank law shows the government isn’t serious about obtaining an IMF loan,” said Gabor Orban of Aegon Fund Management in Budapest. “The government is floating the possibility of an IMF deal but in reality it’s playing for time, hoping the global economy will improve and make a bailout unnecessary.”
In the meantime, Jose Barroso, European Commission President, intends to be “constructive and avoid any escalation of the situation” after the central bank law comes into play, according to commission spokesman Joe Hennon.