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Conflicting opinions about Matolcsy’s appointment

March 4th, 2013

Newspapers are full of mostly cautious speculation about the fate of the National Bank under György Matolcsy who hasserved so far as Minister for National Economy. While some commentators see his appointment as a coup, others point out that the markets had taken the change for granted.

Magyar Nemzet, the leading pro-government daily announces in its headline that “the National Bank will be Hungarian again.” In her editorial, Anna Szabó argues that nothing extraordinary happened in the wake of the announcement, and the exchange rate of the forint barely fluttered. She sees that as proof that international economic actors have begun to appreciate Matolcsy’s achievements as Minister of the Economy. While under outgoing president András Simor, the National Bank (MNB) was loyal to the IMF and international organizations, even at the price of re-interpreting Hungarian law, from now on, Szabó continues, the MNB will be at the service of the Hungarian people and the Hungarian economy.  The change is a relief, she argues, for while Simor pursued a (low) inflation target by keeping interest rates high, other national banks abandoned that paradigm long ago. Szabó expects the new MNB boss to conduct a more flexible policy with an eye to increasing Hungary’s growth potential.

HVG’s commentator, Leonárd Máriás describes Matolcsy as “the man who dreams about money printing machines.” Drawing on previous publications by Matolcsy – who has a regular column in the centre-right Heti Válasz – the author accuses the new MNB President of believing that the financial sector as a whole is made of nothing but malicious speculation. The commentary quotes Mr Matolcsy’s emphasis on production, while he dismisses finance as ’hocus pocus’. In a vitriolic remark, he describes the change at the helm of the MNB as historic indeed, as Matolcsy will be the first MNB president who thinks in those terms. He also blames Matolcsy for despising the view that the world is ruled by utilitarian rationalism. The journalist quotes earlier remarks by the new MNB president which suggest that he believes irrational decisions may turn out to be rational, and vice versa. Instead of ’the traditional logic according to which money is the only measure,’ (another quote from Matolcsy), we will now have a leading banker in whose vocabulary the most important items are ’love, faith, trust, participation and empathy.’ Although at certain points in his career Matolcsy did support ’orthodox’ measures, he still thinks there are ways to support economic growth that go beyond the usual scope of MNB tools and cites ’12 or 16 measures’ already taken by other central banks that could prove useful in Hungary, Máriás remarks disapprovingly.

In Népszabadság, Levente Tóth simply calls Matolcsy ’the engine’, and jokes about how difficult it must have been for Orbán to pick the right person. Matolcsy is the longest serving minister in the two Orbán governments, apart from the Prime Minister himself and the Minister of the Interior. He also managed to elegantly bypass previous MNB president and former favourite, Zsigmond Járai, who has recently turned against the government’s economic policies. The MNB is and will remain independent – the author quotes the Prime Minister – because quite independently from one another, Matolcsy and Orbán want the same. They have found in each other partners who appreciate their visionary thinking, Tóth concludes.

In Népszava, György Sebes also puts his oar in. Trust is what counts most for the Prime Minister, and he knows Matolcsy can be trusted. This has been proven time and again when Matolcsy’s policies were so controversial that even the pro-government Magyar Nemzet speculated he might have to go. The new Minister of the Economy, economist and fiscal expert Mihály Varga, is also a trusted associate of Orbán’s, Sebes states. Should he secretly harbour some ideas of steering the ship in another direction, he will be reminded of what Orbán said on March 1st: “the government’s plans remain the same and so does the economic policy.” Orbán can now celebrate – all important positions in the country are occupied by his men, just as he planned, the columnist claims, bitterly.

Véleményvezér, a conservative blog increasingly critical of the government suspects that PM Orbán feels more comfortable now with his old allies, whom the commentator accuses of following him blindly anywhere. So Matolcsy comes in handy, as he is the man who believes in unorthodoxy, especially when the government is in need of cash. He would cut the interest rate or even draw on the monetary reserves if so required by the government’s political designs. As for the vacated post of Minister of the Economy, the blogger gives no quarter to Matolcsy’s successor, Mihály Varga, an otherwise popular politician. The Prime Minister, Véleményvezér argues, will not find people who are willing to identify with his “economic policies which change direction every other day,” so Mihály Varga is the obvious choice.

Miklós Újvári in Világgazdaság, a left-leaning business daily, says Matolcsy’s takover was carefully prepared and cushioned with government communication, and their success is remarkable as the markets have not been shocked at all. Their patience – speculates the author – may also reflect the fact that from Monday on, Matolcsy is minister no more. This will come as  a relief for the markets, as Mihály Varga is known as a competent and cautious politician. Újvári believes Matolcsy cannot do “anything exceedingly stupid,” in his new job as issuing bank chief, “because he would immediately get a good beating from the markets.”

On cink.hu,László Szily, a popular and irreverently independent blogger once associated with Index.hu (Index was left by several leading journalists, including two editors in recent months), comments on Matolcsy’s new position in an uncharacteristically sombre tone. Matolcsy moves in with a Blitzkrieg – he writes, referring to gossip according to which all activity in the bank will be halted, as Matolcsy has ordered that anything requiring a signature must first be approved at the very top. Szily writes that he has worked in such a centralized institutions, and when everything is controlled from the top, the end is not far away. If the new system only applies until Matolcsy gets rid of all analysts and other employees he does not trust, as the rumour goes, then there is yet hope for the bank, but if he keeps up this level of control, the MNB will fall apart.

On Index, Miklós Jenei and András Szabó choose to comment on Varga’s appointment rather than Matolcsy’s. They concur with other commentators: the new minister for National Economy is loyal and faithful yet he is also competent and cautious. The choice, the authors speculate, might have been motivated by a desire to restore confidence in Hungarian economic policy. He also has strong support within Fidesz: he received the most votes of all three vice-presidents at the party assembly. He has also been considered as a successor to Orbán, although on some occasions he has slipped and was forced to withdraw some remarks on policy issues. The authors describe him as polite and patient, although occasionally sarcastic.

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