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Hungary's central bank governor calls Hungarian economic model a success

Xinhua, January 24, 2015 Adjust font size:

There is definitely a Hungarian economic model and it has been working successfully, Gyorgy Matolcsy, the governor of the National Bank of Hungary told the fourth Carpathian Basin Economic Forum in the city of Szekesfehervar on Friday, according to Hungarian News Agency MTI.

Just about everyone acknowledges how well it has been working, he said, even the business media of the European Union and the world at large, "which has been on an offensive against the Hungarian model," had praised it for its conversion of residents' foreign currency loans to Hungarian forints.

The recent conversion to forints, involving home mortgages accounted in Swiss francs, came shortly before the Swiss National Bank unexpectedly lifted the cap on the franc that had pegged it to the euro on Jan. 15, sending global markets into a spin when the franc soared in value.

"There were quite a few countries aboard the ship of foreign currency loans when it sprang a leak," Matolcsy said, "and only Hungary made it safely to shore."

There were two components to the success of the Hungarian model, Matolcsy said. One was awareness that the money market was not omnipotent and was crisis-prone. The other was a new economic policy focused on employment as well as macroeconomic equilibrium and growth.

Past crises have always hurt employment, he said, which was why the present government had given job growth priority. Between 2010 and 2014 some 400,000 new jobs were created, Matolcsy said, which in turn is sufficient to ensure budget equilibrium and growth.

He did not, however, mention the estimated 450,000 Hungarian citizens, who in December left Hungary during that time to work abroad.

Matolcsy urged the Slovak and Romanian economic players to work with Hungary in "a miniature European Union" to build a unified economic field. Enditem