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8/12/2019 Mnb School
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2013
Annual Report
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Annual Report
2013 BUSINESS REPORT AND
FINANCIAL STATEMENTS OF THEMAGYAR NEMZETI BANK
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Pbished by he Magyar Nemze Bank
Pbisher in charge: Eszer Hergr
Szabadsg r 89., H-1850 Bdapes,
www.mnb.h
ISSN 1585-4604 (nine)
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3ANNuAl REPoRt 2013
Contents
Part A)2013 business report of the Magyar Nemzeti Bank 5
1 The Governors foreword 7
2 A brief overview of the Magyar Nemzeti Bank 10
2.1 objecves and basic asks f he MNB 10
2.2 the bdies and managemen f he MNB 11
2.3 organisan f he MNB 17
2.4 Reans beween he MNB and he Erpean Sysem f Cenra Banks 17
3 Review of the MNBs performance in 2013 20
3.1 Mneary picy 20
3.2 Sabiiy f he nancia inermediary sysem 24
3.3 Financia spervisin and cnsmer precn 28
3.4 Paymen and secries seemen sysems 34
3.5. Managemen f freign exchange reserves 36
3.6 Cash giscs acvies 39
3.7 Sasca service 42
3.8 MNB acvies aimed a imprving he nancia ieracy f cizens 44
3.9 Facrs shaping he cmmnican f he MNB 44
3.10 the MNBs incme in 2013 45
3.11 Financia perfrmance f he MNB 46
3.12 Inrdcn f he ESCB cmmiees 51
3.13 the MNBs research acvies in 2013 53
3.14 Pbicans and cnferences rganised by he MNB in 2013 53
4 Explanation of abbreviations and terms specific to central banking 57
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4 ANNuAl REPoRt 2013
MAGYAR NEMZEtI BANK
Part B)Audited financial statements of the Magyar Nemzeti Bank
1 Independent auditors report 62
2 Balance sheet of the Magyar Nemzeti Bank 64
3 Income statement of the Magyar Nemzeti Bank 65
4 Notes to the financial statements 66
4.1 the MNBs accnng picy 66
4.2 Eecs f macrecnmic rends n he 2013 baance shee and incme saemen f he Magyar Nemze Bank 704.3 Frin receivabes frm he cenra gvernmen 71
4.4 Freign crrency receivabes frm he cenra gvernmen 72
4.5 Frin and freign crrency iabiies f he cenra gvernmen 72
4.6 Ne psins vis--vis he cenra gvernmen 73
4.7 Frin receivabes frm credi insns 73
4.8 Ne psins vis--vis credi insns 74
4.9 Gd and freign exchange reserves f he cenra bank 75
4.10 oher frin and freign crrency receivabes 76
4.11 oher depsis and iabiies 77
4.12 Ne psin vis--vis he IMF 78
4.13 Invesed asses 79
4.14 Impairmen sses and prvisins 84
4.15 Prepaid expenses/accred incme and accred expenses/deferred incme 85
4.16 Changes in eqiy 85
4.17 Revaan reserves 86
4.18 o-baance shee iabiies f he MNB and her signican -baance shee iems 87
4.19 Ne ineres incme and reaised ne incme f nancia perans 89
4.20 Cmpnens f incme frm he revaan f freign exchange hdings 91
4.21 Cs f issing banknes and cins 92
4.22 oher incme/expenses 92
4.23 Incme her han fees and cmmissins 93
4.24 Incme frm spervisry acvies 94
4.25 operang incme and expenses 94
4.26 Infrman n payr and nmber f sa 95
4.27 Disncns beween he ESCB gideine and MNB accnng picy 96
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Part A)
2013 business report of theMagyar Nemze Bank
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1 The Governors foreword
7ANNuAl REPoRt 2013
thrgh 2013, he Mneary Cnci cnned he
easing cyce which had cmmenced in 2012. In he exibe
inan argeng sysem appied by he Magyar Nemze
Bank (hereinaer: MNB), he easing f he mneary sance
was warraned bh by mderae medim-erm inanary
pressres and he eve f ecnmic acviy, which remained
bew is pena. By he end f Jy 2013, he Mneary
Cnci had redced he cenra bank base rae wih 25 basispin rae cs 4 per cen. Hwever, in ine wih he mre
vae gba mney marke senmen bserved in he secnd
haf f he year, he Mneary Cnci hen deceeraed he
rae f he easing cyce in H2, deciding c he base rae by
20 basis pins n ve ccasins. As a res, he main picy
rae decined 3 per cen by he end f 2013. Cnsmer
price inan as decined, and apar frm he rs mnh f
he year, i sayed bew he 3 per cen medim-erm arge
hrgh he year, faing side f he (rerspecvey
accepabe) 31 per cen erance band aer Q1. Average
anna inan was 1.7 per cen in 2013.
In rder faciiae he abiiy f sma and medim-sized
enerprises (hereinaer: SMEs) access credi and
srenghen nancia sabiiy, he MNB annnced he Fnding
fr Grwh Scheme (hereinaer: FGS) in Apri 2013. In Piar I
and II f he FGS, he MNB prvides renancing ans wih a
0 per cen ineres rae credi insns, which may se
he faciiy exend ans SMEs wih a maximm ineres
rae margin f 2.5 per cen and a maximm mariy f 10
years. In he rs phase f he prgramme which ased n
30 Sepember 2013, f he HuF 750 biin avaiabe a a f
neary HuF 701 biin was disbrsed SMEs, crrespnding isan f 93.5 per cen. ths, he prgramme had a
signican impac n he acviy f ecnmic agens bh
n he demand side and n he sppy side. I shd be
emphasised ha new invesmen ans accn fr mre han
60 per cen f he ans disbrsed in Piar I f he FGS, which
is benecia in respec f he prgrammes impac n grwh.
the ans disbrsed by credi insns in Piar II were as
primariy sed renance invesmen ans. Renancing f
freign crrency ans redced he SME secrs expsre
exchange rae risks, hereby migang he assciaed sabiiy
risks. In view f he sccess f he FGS, he Mneary Cnci
decided cnne he prgramme frm 1 ocber 2013
n he end f 2014 wih an inia fnding vme f HuF
500 biin, which may be raised by he Mneary Cnci p
HuF 2,000 biin, depending n macrecnmic, mney
marke and ending devepmens.
the freign crrency iqidiy prbems prevaiing in he frinFX swap marke sared ease in 2013. Pary wing his
devepmen, he banking secrs demand fr radina
cenra bank FX swap ransacns decined cmpared he
previs years. A he same me, he MNB inrdced new FX
swap enders nder Piar III f he FGS, which were inended
redce Hngarys vnerabiiy and migae he insns
ineres rae risk. As a res f he new enders, he pri
f sanding cenra bank swap cnracs increased in 2013.
the new MNB Ac enering in frce n 1 ocber 2013
inegraed nancia spervisin and cnsmer precn
fncns in he cenra bank, and vesed he MNB wihmacrprdena pwers and resn fncns. In he new,
inegraed rganisan, he decisin-making srcre was
as ransfrmed, and a Financia Sabiiy Cnci was se p
discss micr and macrprdena isses.
As sa, he Magyar Nemze Bank issed is Report on
Financial Stability wice in 2013, in which i pbished anayses
regarding he risks jepardising he smh fncning f he
nancia inermediary sysem. In rder ensre he sabiiy
f he nancia inermediary sysem, he MNB cnnsy
expres and presens he risks jepardising sabiiy andparcipaes in he prevenn f sysemic risks and in he
migan r eiminan f exisng risks. the shck-absrbing
capaciy f he Hngarian banking secr is adeqae bh frm
he perspecve f iqidiy and capia adeqacy. the marked
prcycicaiy f he nancia sysem cnned mderae in
2013, b he ending acviy f dmesc nancia insns
is s n scien adeqaey sppr ecnmic grwh.
Prcycicaiy, which has been idened by he MNB as a
majr risk, has decined, primariy de he MNBs rae-
cng cyce and he FGS.
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8 ANNuAl REPoRt 2013
MAGYAR NEMZEtI BANK
A is sessin n 16 Sepember 2013, he Pariamen
adped he dra egisan n he Magyar Nemze Bank1
which decided inegrae he nancia marke spervisin
fncn in he cenra bank. Having drawn cncsins frm
he nancia crisis, wih his Ac he egisar creaed a cenra
bank which, wihin he framewrk f a singe insn,garanees he sabiiy f he nancia sysem and he
fncning f individa nancia insns. the negave
repercssins f he nancia crisis in Hngary and he bes
pracces f severa Eu Member Saes have bh demnsraed
ha he harmny beween macr and micr eve spervisin
is indispensabe fr he prevenn and resn f individa
r sysemic nancia crises. As a res f his inegran, he
MNB acqired a cmprehensive infrman base peraining
individa insns, which imprved he cndins fr
macr-eve decisin-preparan and resved he previs
cnradicns srrnding regary acns aken vis--vishe nancia inermediary sysem. Wih he cmprehensive
se f insrmens avaiabe he MNB, he idencan,
prevenn, mniring and cnr f he sysemic risk
facrs hreaening he sabiiy f he nancia sysem and
he individa risks f specic insns have becme mre
harmnised and hs mre ecien. Aer he new MNB
Ac enered in frce, in he cnex f is micrprdena
regary asks, he MNB primariy wrked n deveping
and caibrang he new se f insrmens beswed pn
i by he aw, and hs macrprdena aspecs were as
dy cnsidered dring he appican f micrprdena
srveiance.
the sraegic bjecves f he MNBs prfessina area
respnsibe fr he spervisin f nancia rganisans
and cnsmer precn are in ine wih he asks f he
cenra bank as a whe. the inegran f cenra bank and
spervisry acvies did n case any disrbances in daiy
spervisin; indeed, he eciency f spervisry acvies has
imprved. As a res, he area f spervisin has aken an
impran sep, even in he shr erm, wards is sraegic
bjecve: he esabishmen f an ahriy acknwedged
and recgnised in he spervisry cmmniy f he Erpeanunin, which everages he synergies semming frm he
inegran and is capabe f shaping he nancia sysem
sysemacay and ecieny. A he same me, he inegran
f he spervisry area prvides an pprniy review
and reinfrce he se f insrmens inended spervise
he enre sysem f nancia inermedian, incding
mney, capia, insrance and fnd markes. this incdes
he asks f addressing prdena chaenges reaed he
credi insn secr, he devepmen f a mehdgy
ensring qick, rese and ecien spervisin ha is as
capabe f respnding exiby pena negave rends,
and he ecien managemen f new asks emerging in
Hngarian ega pracce and spervisry respnsibiies. As
regards marke spervisin, key asks incde he inrdcn
f faser and mre exibe eary inervenn pracces and
harmnisan f he wrk f a ahries cperang wih
ne anher in he area f marke spervisin. In he edf cnsmer precn, he cenra bank expecs marke
parcipans n ny cmpy wih he eer f he aw, b
as respec he aspecs f fair service prvider cndc;
indeed, he MNB inends ake seps srenghen his
ade. Cnsmer precn regans are being reviewed
and a mre sringen sancning picy is being deveped
wih a view precng cnsmers ineress.
In 2013, he MNB iniaed and seered impran changes in
rean he devepmen and regan f he dmesc
paymen sysem and he spervisin f paymen andseemen sysems. on he devepmen and regary side,
egisan has been adped regae ca crrencies and
inerbank fees charged n card ransacns have been sbjec
sary redcn; in addin, he MNB has anched a
new sasca pbican presenng he ms impran daa
n dmesc paymens. As regards acvies reaed he
versigh f paymen and seemen sysems, newrhy
devepmens incde ha preparans have sared fr
he incsin f he frin in a ClS seemen and paymen
mde, and ha he re-icensing prcess f KElER Cenra
Cnerpary ld. has begn ang wih he designan f
he sysems peraed by he cmpany in rder ensrecmpiance wih he reevan Erpean unin regan. In
2013, he MNB cndced paymen inspecns a 19 credi
insns and impsed penaes in he amn f HuF 19.1
miin in a.
the amn f cia freign exchange reserves did n
change naby dring he year and sd a EuR 33.8
biin a he end f 2013. the primary reasn behind he
decine in freign exchange reserves dring he year ies in
he gvernmen deb reaed paymens f deb; hwever,
hese paymens were ams enrey se by EuR ransfersfrm he Erpean Cmmissin and by bnd isses f he
Gvernmen Deb Managemen Agency.
A he end f 2013, he a vae f crrency in circan
amned HuF 3,189 biin, represenng a 17 per cen
year-n-year increase. the increase in he sck f crrency
in circan was bserved acrss a denminans, b
mainy invved he w arges denminans. In 2013, he
MNB perfrmed cash ransacns fr is csmers, credi
insns and he Hngarian Ps oce wih a vae f HuF
3,248 biin.
1Ac CCVIII f 2013 n he Magyar Nemze Bank.
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tHE GoVERNoRS FoREWoRD
9ANNuAl REPoRt 2013
the cnerfeing f frin banknes remained in ine wih
he rends f recen years. the 2,448 cnerfei banknes
wihdrawn frm circan as year reec a decine f 8
per cen cmpared he previs year. Ms cnerfei
frin banknes were nce again fnd amng 10,000
and 20,000-frin nes, accnng fr 81.5 per cen f acnerfeis.
As a res f he inegran f he spervisry fncns
exercised ver he nancia inermediary sysem as a whe
in he rganisana srcre f he MNB ang wih he
reevan cmpeences, he sasca acviy f he MNB
expanded incde spervisry sasca asks. In he crse
f 2013 w signican prjecs were anched, aimed a he
harmnisan and inegran f sasca and spervisry
daa cecn and, ver he ng erm, he devepmen
f a mdern, Erpean qaiy new daa cecn mdeand he inegran f infrman sysems f sasca and
spervisry prpses. In ine wih her Erpean unin
Member Saes, he baance f paymens and nancia
accns sascs f he MNB wi reec he changes
semming frm he cmprehensive revisin f inernana
mehdgica sandards frm he smmer f 2014. As in
previs years, in 2013 preparans fr he appican f
new mehdgica sandards payed an impran re in
he sasca acviy f he MNB.
In 2013, he MNB recrded a pr f HuF 26.3 biin,
represenng an imprvemen f HuF 66.1 biin cmpared he sses incrred in 2012. this favrabe res can be
mainy aribed he decine in ineres sses wing he
decine in he cenra bank base rae n he ne hand, and
he increase in he pr frm exchange rae changes n
he her hand. the wer incme frm nancia perans
reecs devepmens in freign exchange marke yieds.
In 2013, he perang css f he MNB amned HuF
14.4 biin, aeced primariy by he MNBs inegran
wih he HFSA frm 1 ocber 2013. the inegran exered
pward pressre n css, which was manifesed primariy insa css, wing he arger wrkfrce (a sasca sa
nmber increase f 502 persns) and he reaed empymen
erminan css ang wih heir cnribn impicans.
overhead css as increased, abei a esser degree,
mainy as a res f he easing and perang expendires
f he rena prpery n Kriszna kr (he frmer HFSA
biding) in Q4.
the vae f invesmen impemened in 2013 amned
neary HuF 565 miin, which is cnsideraby wer han he
gre recrded fr he previs year. the main reasn fr
he decine is he cancean f cerain panned invesmen
prjecs in he cnex f he fre renvan f he main
ces. the vae f invesmen spending in 2013 was as
inenced by he fac ha, as a res f ers achieve
wer prices, severa asses were prchased a a price wer
han riginay panned. Ms f he prjecs impemened
invved It devepmen, inked, amng her hings,
he mehdgica changes aimed a cmpiance wihinernana sasca reprng bigans.
the MNBs envirnmenay cnscis perans cnned
imprve in 2013, and as a res f a sccessf exerna
adi, he cenra bank renewed is EMAS cercan. the rs
hree-year cyce f he MNBs envirnmena managemen
sysem (KVHIR) ended in 2013, and he MNB has made
preparans fr a cmprehensive review f he sysem. the
cmmimens nderaken fr 2013 were reaised; he main
ces and he bidings f he lgisca Cenre bained
an inernana envirnmena cercan (BREEAM In-use). obaining he cercan fr he main ce is niqe
in Hngary where n her biding sbjec mnmen
cnservan has he same qaican. In he cnex f he
inegran, he migran f he envirnmena managemen
sysem he new sie is in prgress. In he perid 2014
2016, he envirnmena sraegy wi fcs n cnning
he envirnmenay cnscis devepmen f he MNBs
bidings and he cash sppy chain.
one f he primary bjecves f he MNB is cnribe,
in sppr f is sary des, imprving he nancia
ieracy f cizens. t ha end, ver he years i has rganisednmers prgrammes fr he ppan in parcar, fr
ynger generans fcsed n shaping nancia ades
and awareness. the cenra bank, as an insn wih
prfessina experse enjying pbic credibiiy, srives
f an iniave, crdinang and eading re in sciey-
wide prgrammes geared ward he devepmen f
nancia ieracy and wih ha in mind, i cperaes wih
he pbic, civiian and prfessina rganisans cmmied
and wih a vesed ineres in he nancia awareness
f he ppan.
In 2013, he cmmnicans f he MNB were deermined
by he fndamena persnne, insna, rganisana
and adina changes which, vera, resed in a
rejvenaed, mre dynamic exerna image. Pririy was
given measres and asks faciiang mre ecien
cenra bank perans and ecnmic grwh, and hse
serving he ineress f he sciey a arge. By seecng he
apprpriae cmmnican s, he prfessina acviy
f he cenra bank was cmmnicaed he pbic in a
scheded and mre argeed manner han befre. the
dmesc and inernana reanships f he new cenra
bank managemen nderwen a ransfrman bringing
ab qaiy changes.
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10 ANNuAl REPoRt 2013
Company name:Magyar Nemze Bank
Registered oce:1054 Bdapes, Szabadsg r 89.
Form of operaon: cmpany imied by shares. the frm f
peran, i.e. he designan cmpany imied by shares r
is abbrevian need n be incded in he cmpany name
f he Magyar Nemze Bank.
Year of foundaon: 1924
Owner (shareholder): he Hngarian Sae, represened by
he miniser in charge f pbic nances
Scope of acvies:as dened by Ac CXXXIX f 2013 n he
Magyar Nemze Bank (hereinaer: MNB Ac)
Subscribed capital: HuF 10 biin
2.1 OBJECTIVES AND BASIC TASKS OFTHE MNB
the Magyar Nemze Bank (hereinaer: MNB, he cenra
bank) is a ega eny perang as a specia cmpany imied
by shares, which cndcs is perans in accrdance wih
he prvisins f he MNB Ac. Prsan he MNB Ac
enering in frce n 1 ocber 2013, he basic asks and
her respnsibiies f he MNB have been expanded.
Repacing is frmer cenra bank respnsibiiy f spprng
he crean and enfrcemen f a picy aimed a ensring
he sabiiy f he sysem f nancia inermedian, as f1 ocber 2013 he MNB assmed he re f an ahriy
ha shapes he primary macrprdena picy f Hngary.
Mrever, wih he eiminan f he Hngarian Financia
Spervisry Ahriy he independen bdy spervising
he sysem f nancia inermedian as f 1 ocber 2013,
he asks f he HFSA were assmed by he MNB, incding he
spervisin f he sysem f nancia inermedian and he
peran f he Financia Arbiran Bard. In addin, as
par f is respnsibiies, he MNB prceeds as a resn
ahriy.
In ine wih is respnsibiies se frh in he MNB Ac,
besides being a member f he Erpean Sysem f Cenra
Banks, as f 1 ocber 2013 he Magyar Nemze Bank is as
a member f he Erpean Sysem f Financia Spervisin.
Wih regard is membership f he aer insn, he
MNB carries he asks arising frm he scpe f he
Erpean Banking Ahriy, he Erpean Insrance and
occpana Pensins Ahriy, he Erpean Secries
and Markes Ahriy and prsan he MNB Ac as f
is enry in frce he Erpean Sysemic Risk Bard.
In accrdance wih Arce 127 f he treay n he
Fncning f he Erpean unin, he MNB Ac which
esabishes he MNBs primary bjecves and basic asks as
we as is insna, perana, persnne and nancia
independence and peran spaes ha he primary
bjecve f he MNB is achieve and mainain price sabiiy.
Wih prejdice is primary bjecve, he MNB spprs
he mainenance f he sabiiy f he sysem f nancia
inermedian, he enhancemen f is resiience and is
ssainabe cnribn ecnmic grwh, and he MNB
sha sppr he ecnmic picy f he gvernmen singhe insrmens a is dispsa.
the MNB Ac as spaes he independence f he cenra bank
in accrdance wih Arce 130 f he treay n he Fncning f
he Erpean unin. on he basis f cenra bank independence,
he MNB and he members f is bdies sha be independen in
carrying heir asks and meeng heir bigans cnferred
pn hem by he MNB Ac, and sha neiher seek nr ake
insrcns frm he Gvernmen, he insns, bdies and
ces f he Erpean unin, he gvernmens f is Member
Saes r any her rganisans r pica pares, excepfrm he Erpean Cenra Bank and as reqired based n is
membership in he Erpean Sysem f Financia Spervisrs.
the Gvernmen r any her rganisan sha adhere his
principe, and sha n aemp inence he MNB r any
member f is bdies in he crse f perfrmance f heir asks.
The basic tasks of the MNB are the following:
i denes and impemens mneary picy;
i has he excsive righ isse banknes and cins, incding
cmmemrave banknes and cins, in he cia crrency
f Hngary;
2 A brief overview of the MagyarNemze Bank
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i has he excsive righ hd and manage cia
reserves in freign exchange and gd, in rder preserve
he exerna sabiiy f he Hngarian ecnmy;
i has he excsive righ cndc freign exchange
perans in rean he managemen f freignexchange reserves and he impemenan f he exchange
rae picy;
i has he excsive righ versee he dmesc paymen
and seemen sysems as we as he secries seemen
sysems and, as par f his versigh dy, mnirs
he peran f he sysem and he peran f he
rganisan perfrming cenra cnerpary acvies in
rder ensre he snd and ecien peran f hese
sysems and he smh circan f mney. Wihin he
scpe f is pwers se frh in he MNB Ac, i parcipaesin he devepmen f paymen and secries seemen
sysems;
i cecs and pbishes he sasca infrman reqired
fr carrying is asks and fing is sasca reprng
bigans ward he Erpean Cenra Bank as dened in
Arce 5 f Prc (N 4) n he Sae f he Erpean
Sysem f Cenra Banks and f he Erpean Cenra Bank
aached he treay n he Fncning f he Erpean
unin;
i esabishes he macrprdena picy fr he sabiiyf he enre sysem f nancia inermedian, wih
he bjecve f enhancing he resiience f he sysem
f nancia inermedian and ensring is ssainabe
cnribn ecnmic grwh. t ha end and wihin he
imis specied in his Ac, he MNB expres he bsiness
and ecnmic risks hreaening he sysem f nancia
inermedian as a whe, prmes he prevenn f
he devepmen f sysemic risks and he redcn
r eiminan f sysemic risks which have evved;
frhermre, in he even f disrbances he credi
marke i cnribes he baanced impemenan fhe fncn f he sysem f inermedian in nancing
he ecnmy by smang ending and by resraining
ending in he even f excessive credi w.
Tasks of the MNB beyond its basic tasks:
i acs as a resn ahriy;
acng as a se spervisr f he sysem f nancia
inermedian, i:
- ensres he smh, ransparen and ecien
fncning f he sysem f nancia inermedian;
A BRIEF oVERVIEW oF tHE MAGYAR NEMZEtI BANK
11ANNuAl REPoRt 2013
- faciiaes he prden peran f he persns and
rganisans frming par f he sysem f nancia
inermedian and spervises he prden exercise f
wners righs;
- discvers ndesirabe bsiness and ecnmic risks individa nancia rganisans r individa secrs
heref, redcing r eiminang specic r secra
risks which have evved, and aking prevenve
measres ensre he prden peran f
individa nancia rganisans;
- precs he ineress f hse sing he services
prvided by nancia insns and srenghens
pbic cndence in he sysem f nancia
inermedian.
via he Financia Arbiran Bard, i heps see
f cr dispes arising frm he esabishmen and
perfrmance f he ega reanship esabished beween
he cnsmer and he rganisans f he sysem f
nancia inermedian in respec f he se f services.
Any frher asks f he MNB sha be dened by aw and,
in rean he spervisin f he sysem f nancia
inermedian, by ega regans adped prsan he
ahrisan f he ac. Sch asks f he MNB sha cmpy
wih he basic asks and respnsibiies f he MNB as dened
in he MNB Ac.
2.2 THE BODIES AND MANAGEMENTOF THE MNB
the MNB peraes as a ega eny in he frm f singe-
member cmpany f imied by shares. the genera res
peraining cmpanies imied by shares, namey he
prvisins f Ac n Bsiness Asscians appy he MNB,
wih de cnsideran fr he dergans se frh in he
MNB Ac.
the Hngarian Sae as sharehder is represened by he
miniser in charge f pbic nances. the MNB peraes
wih a Genera Meeng.
the shareholder is ened pass decisins, by way f
a sharehders resn, n he esabishmen f an
amendmen he Saes as we as he appinmen,
dismissa and remneran f he adir.
As a garanee f independence, cnrary he pracce
f her cmpanies imied by shares, he remneran f
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16 ANNuAl REPoRt 2013
MAGYAR NEMZEtI BANK
Members of the Supervisory Board of the Magyar Nemze Bank
le righ: Gbr orbn, Dr Per Rna, Isvn Varga, lsz Madarsz, Zsigmnd Jrai (Chairman), Dr Gbr Andrs Sznyei, Dr tams Kana,Dr Aa Simn th.
resn. Prir png frward a prpsa fr he
appinmen r dismissa f he MNBs adir, he Gvernr
f he MNB cnss wih he Presiden f he Sae Adi
oce.
the Supervisory Board is he bdy respnsibe fr he
cnns spervisin f he MNB n behaf f he wner.
the spervisry cmpeence f he Spervisry Barddened by he MNB Ac des n cver he spervisin f
he Banks perfrmance f is basic asks, is acns as a
resn ahriy and is spervisry acviy in respec
f he nancia inermediary sysem, r he impac f he
afremenned n he MNBs pr and ss. Accrdingy, he
Spervisry Bard cmpies he repr reqired by he Ac n
Bsiness Asscians n he anna accns as specied in
he Ac n Accnng sbjec he abve imians.
the members f he Spervisry Bard dened in he MNB Ac
2 Since, prsan Arce 67(1) f Ac CCVIII f 2011, he enry in frce f he Ac did n aec he mandae f he members f he SpervisryBard prsan Arce 52/A(4) f Ac lVIII f 2001 n he Magyar Nemze Bank, he mandae f he members eeced by he Pariamen asremained in eec.
are is Chairpersn eeced by he Pariamen, hree addina
members eeced by he Pariamen, he represenave f
he miniser respnsibe fr he sae bdge and an exper
appined by he miniser respnsibe fr he sae bdge.
the Chairman f he Spervisry Bard, wh is eeced by he
Pariamen, is nminaed by he gverning pares, whereas
he her members eeced by he Pariamen are nminaed
by he pariamenary grps.
the members erm f ce cincides wih he mandae f
he Pariamen.
In 2013, he members f he Spervisry Bard f he MNB
were:2
Zsigmnd Jrai, Chairman,
Dr tams Kana,
lsz Madarsz,
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17ANNuAl REPoRt 2013
bdy f he ECB is he Genera Cnci, which is respnsibe
fr mainaining an insna reanship beween he
Ersysem and he cenra banks f nn-er area Member
Saes. the Genera Cnci hds is meengs qarery
and cnsiss f he Presiden and he Vice-Presiden f he
Erpean Cenra Bank and he respecve gvernrs f hecenra banks f a Eu Member Saes. the key respnsibiies
f he Genera Cnci incde cnsancy cncerning
preparans fr accessin he er area, apprva f
he cnvergence reprs f he ECB and mniring he
fncning f ERM II. Wihin he framewrk f he aer
acviy, i assesses he ssainabiiy f he biaera exchange
rae f nn-er crrencies parcipang in ERM II agains he
er and prvides a frm fr he aignmen f mneary and
exchange rae picies and he managemen f inervenn
and nancing mechanisms in ERM II. In addin, he Genera
Cnci is invved in verifying wheher he cenra banks fEu Member Saes and he ECB cmpy wih he prhibin
f mneary nancing f he bdge and privieged access f
he pbic secr nancia insns. the Genera Cnci
as cnribes he ECBs advisry fncns and he
cecn f sasca infrman; i ms be cnsed in
respec f any changes in he res f accnng and nancia
daa sppy, as we as isses reaed he adjsmen f he
keys fr sbscripns he ECBs capia. the mandae f
he Genera Cnci wi expire n he dae when a f he
Member Saes have adped he er.
As a res f Craas accessin he Eu in Jy 2013, henmber f ESCB members rse frm 27 28. In 2013, he
nmber f er-area Member Saes did n change, b n 9
Jy 2013 he Cnci f he Eu apprved lavias enry he
er area, resng in an increase in he nmber f er-area
Member Saes frm 17 18 as f 1 Janary 2014.
the ESCB members are as he wners f he ECB. the
respecve wnership shares f Member Saes are deermined
accrding heir shares in GDP and a ppan f he
Eu (n he basis f sasca daa cmpied by he Erpean
Cmmissin). As f 1 Jy 2013, he paid-p capia f he ECBincreased frm EuR 10.76 biin EuR 10.825 biin.
Crreny, er-area cenra banks sbscribe 70 per cen
f he ECBs capia, whie he remaining 30 per cen is
divided amng he cenra banks f nn-er area Member
Saes. these aer cenra banks pay a pre-dened minimm
percenage f heir respecve sbscripns he ECBs
capia as a cnribn he perana css f he ECB
which are incrred in cnnecn wih heir ESCB membership.
Wih eec frm 29 December 2010, his cnribn was
dened as 3.75 per cen f he respecve sbscripns
(previsy i had been 7 per cen). As se frh in he Sae
f he ESCB and f he ECB, he capia keys are adjsed every
Dr Per Rna,
Dr Gbr Andrs Sznyei,
Isvn Varga,
Dnie Paai (represenave f he miniser respnsibe
fr he sae bdge) n 10 March 2013,
Gbr orbn (represenave f he miniser respnsibe frhe sae bdge) frm 4 May 2013,
Dr Csaba Kandrcs (exper appined by he miniser
respnsibe fr he sae bdge) n 3 May 2013,
Dr Aa Simn th (exper appined by he miniser
respnsibe fr he sae bdge) frm 1 Sepember 2013.
2.3 ORGANISATION OF THE MNB
Prsan he Saes f he MNB enering in frce n 4
March 2013, he Execve Bard decided n he inrdcn
f a new perana gvernance mde as f 9 March 2013. thereview f rganisana sns and based n perana
experiences he pmisan f he prcesses k pace
n 1 Jy 2013, when he Execve Bard renewed and, a
signican degree, ransfrmed he rganisana srcre
f he MNB. the perana prcedres deveped a ha
me cnsed he basis fr an addina resrcring
which was necessiaed by he enry in frce f he MNB
Ac n 1 ocber 2013, in he cnex f which he Execve
Bard esabished he ms impran perana res f he
inegraed rganisan, he srcre f he rganisan, he
divisin f abr beween he rganisana nis and by
mdifying he exisng asks and respnsibiies f he depygvernr psin dened he new scpe f cmpeence f
he depy gvernrs.
Based n he rganisana srcre f he MNB as a
31 December 2013, he MNB had 30 rganisana nis
spervised by he Gvernr, he hree Depy Gvernrs, he
Direcr Genera and he Execve Direcrs reprng hem.
the rganisana srcre as a 31 December 2013 is shwn
in he fwing organisaon chart.
2.4 RELATIONS BETWEEN THE MNBAND THE EUROPEAN SYSTEM OFCENTRAL BANKS
Hngarys accessin he Erpean unin as enaied he
MNBs membership in he Erpean Sysem f Cenra Banks
(ESCB). the ESCB cmprises he Erpean Cenra Bank (ECB),
which was esabished in Jne 1998 wih is sea in Frankfr,
and he nana cenra banks f he Eu Member Saes. Is
gverning bdies are he Execve Bard and he Gverning
Cnci, he aer cnsisng f he members f he ECBs
Execve Bard and he gvernrs f he cenra banks f
he er-area Member Saes. the hird decisin-making
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Organisaon Chart
Organisaon Chart of Magyar Nemze Bank31 December 2013
A BRIEF oVERVIEW oF tHE MAGYAR NEMZEtI BANK
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3.1 MONETARY POLICY
In 2013, he Mneary Cnci cnned he easing cyce
which had cmmenced in 2012. In he exibe inan
argeng sysem appied by he MNB, easing he mneary
sance was warraned by mderae medim-erm inanarypressres and he eve f ecnmic acviy, which remained
bew is pena. leading gba cenra banks mainained
excepnay se mneary cndins, which was reeced
in he risk assessmen f dmesc nancia insrmens,
widening he scpe fr mneary picy manevre.
In he pinin f he Mneary Cnci, p remained bew
pena hrgh 2013, and nempymen exceeded he
ng-erm eve deermined by srcra facrs. In ine wih
he assessmen f he Mneary Cnci, as he cs shcks
experienced in 2012 faded, he disinanary impac f
weak demand was increasingy perceivabe, which was asreeced in nderying inan rends. Firms had imied
pprnies price in he previs increases in prdcn
css. these facrs and gvernmen measres aimed a he
redcn f adminisered prices pshed inan bew he 3
per cen arge by he beginning f 2013, and he inan rae
cnned decine frher dring he year. In he jdgemen
f he Mneary Cnci, agains he backdrp f a cnning
weak demand envirnmen, inanary pressre was ikey
remain mderae even aer he dissipan f ransina
shcks. In view f he abve facrs and as in cnsideran
f he graday imprving risk assessmen f Hngary,achieving he medim-erm inan arge in 2013 jsed
mainaining he cas easing f mneary picy. By he
end f Jy 2013, in 25-basis pin rae cs, he Mneary
Cnci had redced he cenra bank base rae 4 per cen.
Gba mney marke senmen, hwever, became mre
vae in he secnd haf f he year, mainy de
increased ncerainy ab he fre f he qanave
easing prgrammes f eading gba cenra banks. In is
cmmnicans, he Mneary Cnci indicaed ha he
mre fragie inernana envirnmen warraned increased
can and accrdingy, in Ags i decided cnne he
cng cyce f he cenra bank base rae in mre cas,
20-basis pin seps. In he secnd haf f he year, n ve
ccasins he Mneary Cnci decided redce he main
picy rae by 20 basis pins, bringing dwn he rae 3
per cen. In December, he Mneary Cnci indicaed ha,
based n he aes Repr n Inan, frher picy easing
was ikey be reqired in rder achieve medim-ermprice sabiiy. the gba nancia envirnmen, hwever,
was deemed be vae. In cnsideran f his, as we
as devepmens in Hngarys risk assessmen and he
imprvemen in ecnmic grwh, decisin-makers expressed
ha frher ineres rae cs cd n be red , b hey
as indicaed ha swing dwn he pace f redcns may
be warraned in he fre.
Achievement of the inaon target in 2013
In he assessmen f he Mneary Cnci, inan rends in
2013 nderwen marked changes cmpared he previsperid. Cnsmer price inan decined signicany: apar
frm he rs mnh f he year, i remained bew he 3 per
cen medim-erm arge hrgh he year, faing side
3 Review of the MNBs performancein 2013
Chart 1
The inaon target and inaon developments since theseng of the connuous target
Source: HCSO, MNB.
10
9
8
7
6
5
4
3
2
1
0
2007 2008 2009 2010 2011 2012 2013
10
9
8
7
6
5
4
3
2
1
0
Per cen Per cen
Cnsmer price index
Inan arge
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In he secnd haf f he year, even he cenra banks
indicars capring nderying inan rends pined
hisricay w dynamics as he cmbined res f faing
exerna marke price pressres, decining cmmdiy prices
and he grada adjsmen f inan expecans, in
addin he signican nderisan f capacies and
sbded dmesc demand. t a cnsiderabe degree, he
regaed price redcns carried in severa seps dring
he year as cnribed he evn f a w inan
envirnmen. owing he se abr marke cndins
and decining inan expecans, wage dynamics were
sbded. the price dynamics f marke services acceeraedsmewha in H2, mainy de he nancia ransacn evy,
which raised he price index f banking services.
lking ahead, inanary pressres are ikey remain
med ver he medim erm. As he inan redcing
eec f adminisered prices fades, he cnsmer price index
increase is expeced mve in ine wih he arge by he
end f he hrizn reevan fr mneary picy. the Mneary
Cnci wi cnne cndc is mneary picy ensre
ha he grwh rae f cnsmer prices is cnsisen wih he
inan arge ver he medim erm. over he ng erm,mneary picy can bes cnribe ecnmic grwh and
a predicabe macrecnmic envirnmen by achieving and
mainaining price sabiiy and by ensring he sabiiy f he
nancia sysem.
Changes in monetary policy instruments
First phase of the Funding for Growth Scheme
successfully concluded
the MNB annnced he Fnding fr Grwh Scheme (FGS)
in Apri 2013. the prgramme is inended faciiae he
access f sma and medim sized enerprises (SMEs)
Table 1The consumer price index and its components
(percentage change, year-on-year)
2011 2012 20132013
Q1 Q2 Q3 Q4
Cre inan 2.7 5.1 3.3 3.6 3.2 3.1 3.5
unprcessed fd 4.3 6.8 6.1 10.7 9.6 4.7 -0.7
Fe and marke energy 13.8 11.9 -0.9 2.1 -3.0 -0.6 -2.3
Regaed prices 4.0 4.7 -3.7 -1.1 -2.8 -4.0 -6.8
Cnsmer price index 3.9 5.7 1.7 2.9 1.8 1.5 0.8
Cnsmer price index excding indirecaxes 3.8 3.5 1.2 2.1 1.2 1.1 0.4
Note: In the case of price indices with unchanged tax content, the CSO adjusts the consumer price index for the technical eect of changes in indirecttaxes. The me series of certain inaon groups may dier, even retroacvely, from those published in earlier years due to the reclassicaon of some
paral items at the beginning of 2012.Source: HCSO.
f he (rerspecvey accepabe) 1 per cen erance band
aer Q1, wih average anna inan sanding a 1.7 per
cen in 2013.
the inan rae, which was signicany wer han he
inan arge in 2013, was he ne res f severa facrs.
the deceeran in he grwh rae f cnsmer prices
bserved a he beginning f he year resed primariy frm
he VAt increase f Janary 2012 drpping f he basis and
a 10-per cen decine in regaed energy prices; in addin,
he disinanary impac f weak inerna demand was as
a cnribr. the inan rae cnned decrease dringhe spring, mainy wing favrabe cs shcks and he
price-redcing eec f he demand envirnmen. As here
was ie rm fr price increases in he weak demand
envirnmen, crprans primariy aemped resre
prabiiy by resraining abr css.
Chart 2
Trend inaon indicators
Source: MNB.
6
5
4
3
2
1
02005 2006 2007 2008 2009 2010 2011 2012 2013
Scky price inanCre inan excding indirec ax eec
Demand sensive inan
6
5
4
3
2
1
0
Per cen Per cen
REVIEW oF tHE MNBS PERFoRMANCE IN 2013
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credi and srenghen nancia sabiiy. In he Mneary
Cncis jdgemen, dring he nancia and ecnmic
crisis he chances f cmpanies access credi deeriraed
signicany, especiay in he case f sma and medim-
sized enerprises, which face even greaer dices when
rying nd aernave srces f nance. In Piar I and IIf he FGS, he MNB prvided renancing ans wih a 0 per
cen ineres rae credi insns, which were expeced
se he faciiy exend ans SMEs wih a maximm
ineres rae margin f 2.5 per cen and a maximm mariy
f 10 years.
A he me f he annncemen, he rigina avaiabe vera
amn envisaged fr he rs w piars f he prgramme
was HuF 500 biin. Fwing he annncemen,
crprans expressed enrms ineres in he ans
avaiabe nder he Scheme, which was as reeced in heparcipan appican rae f credi insns regisered
a he end f May. In rder make w-ineres ans
avaiabe as many SMEs as pssibe in he FGS, even befre
he anch f he Scheme, he Mneary Cnci increased
he imi amn f he faciiy by 50 per cen HuF 750
biin. the riginay annnced avaiabiiy perid f he
prgramme was beween he beginning f Jne he end
f Ags 2013; hwever, in he case f invesmen ans
cmpanies have an addina 6-mnh perid draw dwn
p maximm 70 per cen f he cnrac amn. In view f
he increased demand fr Piar I aer cmmencemen f he
prgramme, n 1 Ags 2013 he Mneary Cnci enabedcredi insns se heir credi ine acaed nder Piar
II wihin he framewrk f Piar I imprve he eecve se
f he vera amn, and exended he disbrsemen perid
by ne mnh. of he HuF 750 biin avaiabe nder he
FGS, credi insns disbrsed a a f neary HuF 701
biin SMEs, crrespnding a isan rae f 93.5 per
cen. Cnracs amnng a a HuF 472 biin and HuF
229 biin were exended in Piar I and Piar II, respecvey,
crrespnding isan raes f 111 per cen and mre
han 70 per cen, respecvey. the ra f new ans,
especiay new invesmen ans, was high in Piar I, whichpins a favrabe grwh eec.
In view f he sccess f he rs phase f he Scheme, n
11 Sepember 2013 he Mneary Cnci f he MNB
decided cnne he FGS. the secnd phase f he
prgramme cmmenced a he beginning f ocber 2013,
wih SMEs abe appy fr ans n he end f 2014.
Credi insns had fnds avaiabe p heir sanding
ans SMEs as a 30 Sepember 2013, b in cnras
he rs phase, his was n based n an inia acan b
raher accrding he an cnracs cncded wih SMEs,
n a rs-cme rs-serve basis n he vera avaiabe
amn was sed p. the vera avaiabe amn f he
prgramme is HuF 500 biin in he rs rnd, which may
be raised p HuF 2,000 biin by he Mneary Cnci,
depending n he prevaiing macrecnmic, nancia and
ending envirnmen. of he ans, 90 per cen may be
disbrsed in he frm f new ans, whie a maximm f 10
per cen may be sed renance sanding HuF r freigncrrency ans. In view f he higher ra f new ans, he
benecia impac f he prgramme n ecnmic grwh is
expeced increase. In he secnd phase f he prgramme,
new cndins wi cme in eec, which are designed
redce he ninended ses f he ans which d n r ny
inscieny serve he bjecves f he Scheme.
A he end f 2013, based n he feedback frm represenaves
f he privae secr and credi insns, he MNB ne-
ned he cndins f he prgramme nce again. Amngs
her changes, frm 1 Janary 2014 nancia enerprisesmay as prvide nancing and, in addin ans, a new
prdc nancia ease can be as ered nder he FGS.
Wih he annncemen f he FGS, he w-year caeraised
an ender was sspended eecve as f 4 Apri 2013.
Forint liquidity management of the banking system
In 2013, he frin iqidiy f he banking secr was
inenced by a nmber f facrs. on he ne hand, iqidiy
was bsed by he FGS and genera gvernmen paymens;
n he her hand, iqidiy was absrbed by he increase in
cash in circan and he cenra banks sanding swap
cnracs. By December 2013, a frin iqidiy (cenra
bank bis, he baance f seemen accns and he
Chart 3
Course and ulisaon of the 1st phase of the FGS
120
100
80
60
40
20
0
Source: MNB.
Repred amn per weekusage in Piar I (righ-hand scae)usage in Piar II (righ-hand scae)
120
100
80
60
40
20
0
3June7
June
10June14June
17June21June
24June28June
1July5July
8July12July
15July19July
22July26July
29July2Aug.
5Aug.9Aug.
12Aug.16Aug.
21Aug.24Aug.
26Aug.30Aug.
2Sept.6Sept.
9Sept.13Sept.
16Sept.20Sept.
23Sept.27Sept.
HuF biin Per cen
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vernigh cenra bank depsi pri geher) had risen
by HuF 1,300 biin HuF 6,000 biin.
Credi insns reqired hd reserves may chse frm
reserve ras f 2, 3, 4 and 5 per cen semi-annay (in Apri
and ocber). In 2013, he average reqired reserve radecined sighy, sanding a 2.59 per cen in Nvember 2013.
Sarng frm he secnd haf f 2012, he cas iqidiy
managemen ypica f he banking secr previsy
appeared ease smewha. Neverheess, he iqidiy
managemen f he banking secr became mre cas
nce again sarng frm Ags 2013. Cmpared previs
mnhs, credi insns hding f excess reserves a he
beginning f he mnh increased, and in addin, heir
pri f new vernigh depsis wih he cenra bank
as rse. Beween Janary and Jy 2013, credi insnspaced vernigh depsis wih he cenra bank in an amn
f HuF 95 biin n average, cmpared an average f HuF
140 biin beween Ags and December f 2013. owing
he rising cenra bank vernigh depsi pri, he
vernigh inerbank nsecred ineres rae, i.e. he HuFoNIA,
decined sighy wihin he ineres rae crridr. Whereas
he HuFoNIA was 30 basis pins wer han he cenra bank
base rae n average beween Janary and Jy 2013, in he
perid frm Ags December 2013 he dierence rse
55 basis pins n average. As he HuFoNIA apprached he
bm f he ineres rae crridr, is vaiy as decined.
three-mnh inerbank yieds he yieds ms reevan fr
ineres rae ransmissin mved in ine wih he redcns
f he cenra bank base rae, and as reeced infrman
peraining expeced fre cs. likewise, ans prvided
hsehds wih shr-erm maries and wih a variabe
ineres rae r an ineres rae xan f p 1 year decined
a simiar degree as he cenra bank base rae, and he
same decine characerised he shr-erm depsis paced by
hsehds, as we as crprae an and depsi raes.
Aer he inegran f cperave banks, he accns fcperave banks previsy hed by he MNB are hed, as
frm 1 Nvember 2013, by he takarkbank. As a res, he
cperave banks cncerned are nw excded frm he
cnerpares f radina cenra bank perans.
Instruments providing foreign exchange liquidity
central bank currency swap transacons
Crrency swap spreads, which capre he exra css f
gaining access freign crrency nancing, decined in
2013. Whie vernigh and hree-mnh FX spreads sd
a 55 and 125 basis pins, respecvey, in 2012, hey fe
20 and 40 basis pins, respecvey, in 2013. this decine
k pace in Q1, parae an increase in he freign
crrency sppy f freign invesrs in he crrency swap
marke. Anher psive devepmen was he fac ha
he emprary spread increases bserved in previs years
a he end f each qarer were ess characerisc f hemarke in 2013. A he same me, hwever, he widening f
he spreads was s ypica a he end f he year.
uisan f he MNBs radina (vernigh and hree-
mnh) EuR/HuF crrency swaps prviding EuR iqidiy
decined cmpared previs years. the banking secr
ny k recrse he vernigh insrmen, n a a
f hree ccasins (cmpared 9 ccasins in 2012).
In December, in rean end-f-year psin csing
acvies, he MNB annnced a ne- EuR/HuF swap
ender prviding w-week EuR iqidiy; hwever, herewas n demand fr his insrmen as ensins in he marke
had abaed cmpared previs years.
under Piar III f he FGS, he MNB annnces crrency
swaps prviding freign crrency iqidiy is credi
insn parners. Piar III is inended migae he
vnerabiiy f he cnry and he ineres rae risks f he
MNB. Since 3 Jne 2013, EuR/HuF FX swaps and CIRS (m-
crrency ineres rae swap) enders have been annnced
n a weeky basis wih eigh dieren maries. the frins
Chart 4
Recourse to the MNBs FX swap instruments
outstanding amounts
Source: MNB.
13oct.08
12Dec.08
10Feb.09
11Apr.09
10June09
09Aug.09
08.oct.09
07Dec.09
05Feb.10
06Apr.10
05June10
04Aug.10
03oct.10
02Dec.10
31Jan.11
01Apr.11
31May.11
30July.11
28Sep.11
27Nv.11
26Jan.12
26Mar.12
25May.12
24July.12
22Sep.12
21Nv.12
20jan.13
21Mar.13
20May.13
19July13
17Sep.13
16Nv.13
1-day er iqidiy prviding EuR/HuF swap6-mnh er iqidiy prviding EuR/HuF swap3-mnh er iqidiy prviding EuR/HuF swap1- r 2-week er iqidiy prviding EuR/HuF swap
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800600
400
200
0
Miin ers Miin ers 2,200
2,000
1,800
1,600
1,400
1,200
1,000
800600
400
200
0
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prvided by he cnerpares he MNB n he sp eg
f crrency swaps redce he cnerpares frin iqidiy,
hereby decreasing heir sck f cenra bank bis. Since
he EuR iqidiy prvided by he MNB cnerpares
depees is freign crrency reserves, in rder redce
vnerabiiy, credi insns parcipang in he endersare expeced redce heir shr-erm exerna iabiies
in ine wih he freign crrency bained. the prgramme,
which was annnced as asng n end-Ags 2013 nder
he rigina cndins, was exended by he MNB frm he
beginning f Sepember n cancean. the MNB as
deermined ha he maximm vae f FX swaps ha can
be acaed wihin he prgramme was EuR 2.5 biin. on
31 December 2013, a sanding FGS swap cnracs
amned EuR 568 miin. the rigina mariy fr a par
f he sanding pri was 3 mnhs, and 30 mnhs fr
he res f he pri.
3.2 STABILITY OF THE FINANCIALINTERMEDIARY SYSTEM
Prsan he MNB Ac, wih prejdice is primary
bjecve (price sabiiy), he MNB spprs he mainenance
f he sabiiy f he nancia inermediary sysem, he
enhancemen f he sysems resiience shcks, ssainabe
ecnmic grwh and he ecnmic picy f he Gvernmen.
In addin, i deveps he macrprdena picy peraining
he sabiiy f he sysem f nancia inermedian as awhe and, frm 1 ocber 2013, exercises spervisin ver
he nancia inermediary sysem and perfrms cnsmer
precn fncns.
In rder ensre he sabiiy f he nancia inermediary
sysem, he MNB expres and presens he risks jepardising
sabiiy, and parcipaes in he prevenn f sysemic risks and
in he redcn and eiminan f exisng risks. the Magyar
Nemze Bank pbishes is anayses n he risks jepardising
he smh fncning f he nancia inermediary sysem in
its Report on Financial Stability.
In ine wih he pracce f recen years, in 2013 he MNB
pbished is Report on Financial Stabilitywice (21 May and
7 Nvember), and issed is qarery pbican ened
Trends in Lending wih he ress f is srveys presenng
he aes rends in ending. Wih respec iqidiy and
capia adeqacy, he resiience f he Hngarian nancia
inermediary sysem was adeqae in 2013, whie ending
acviy imprved. the aer can be mainy aribed he
cenra banks easing cyce and he FGS.
the new MNB Ac cming in frce n 1 ocber 2013
reinfrced he cenra banks macrprdena mandae,
and prvided i wih he apprpriae se f insrmens as
we. As a res f he spervisry inegran, addina
cmpeences were cnferred pn he MNB. In accrdance
wih is reinfrced and expanded pwers, he MNB cperaes
wih he ahries f he Erpean unin devep is se
f insrmens and picy designed ensre he sabiiy fhe dmesc sysem f nancia inermedian.
Role of the Financial Stability Council
the exended fncns and cmpeences f he rganisan was
sppemened by a new decisin-making srcre. the spreme
decisin-making bdy f he MNB remains he Mneary Cnci.
Decisin-making in respec f micrprdena, macrprdena,
cnsmer precn and he sbseqeny deveped resn
fncns is perfrmed by he newy esabished Financia
Sabiiy Cnci. the Financia Sabiiy Cnci is cmpsed fhe Gvernr f he MNB, as chairman f he Financia Sabiiy
Cnci, a hree Depy Gvernrs, and he Execve Direcrs
respnsibe fr nancia sabiiy, ending incenves and he
spervisin f nancia insns. the Financia Sabiiy Cnci
makes decisins wihin he sraegic framewrk dened by he
Mneary Cnci.
the aignmen f mneary picy and macrprdena picy
decisins is ensred by he verap beween he persnne f he
w cncis n he ne hand, and by he pririy f mneary
picy aspecs dring he preparans fr macrprdena
picy decisins n he her hand. Mrever, he baanced
24 ANNuAl REPoRt 2013
MAGYAR NEMZEtI BANK
cmpsin f he Financia Sabiiy Cnci faciiaes he
reaisan, a he highes pssibe eve, f he rganisana
inegrans pririy arges, he aignmen f macrprdena
and micrprdena picies and cse, smh cperan in
crisis managemen.
Chart 5
Heat map of nancial stability risks
Prcycicaiy Shck-absrbing capaciy
May 2013
Nvember 2013
Nvember 2013
May 2013
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3 the grwh spprng fncn (prcycicaiy) f he nancia sysem is apprximaed by he eve f he Financia Cndin Index (FCI) and heEary Warning Indicar (EWI), whie resiience shcks is apprximaed by he wes vae f hree para indicars (Sysem-Wide Financia SressIndex [SWFSI], liqidiy Sress Index [lSI], and Svency Sress Index [CSI].
secr. under Piar I, he cnracs f credi insns
amned HuF 472 biin, whie HuF 229 biin was
disbrsed in Piar II. New ans accn fr mre han 60 per
cen f he ans disbrsed in Piar I, which is benecia in
respec f he prgrammes impac n grwh. likewise, he
ans disbrsed by credi insns in Piar II were primariysed renance invesmen ans. the renancing f
freign crrency ans redced he SME secrs expsre
exchange rae risks and hs migaed he assciaed sabiiy
risks. Wihin he minimm HuF 3 miin and maximm HuF
3 biin cnrac amn imi, brrwers preferred smaer
vae ans: in erms f he nmber f cnracs, 70 per cen
f he an amns were bew HuF 50 miin.
thanks he FGS, he ineres brden n crprans
eased sbsanay, imprving he nancia psin and
crediwrhiness f he rms cncerned. In addin, in hecase f renancing, he FGS pened p an pprniy fr
swiching banks, which bsed cmpen beween credi
insns. In he case f renanced ans, 20 per cen
f csmers p swich banks. Increased cmpen
cnribes he easing f ending cndins and faciiaes
mre ecien acan f fnds.
Access nger-erm ans deeriraed, especiay dring
he years f he crisis. t a arge degree, he FGS addressed
Chart 6
Financial Condion Index (FCI), real GDP
and the output gap
Note: If the sign of the FCI is idencal to that of the output gap, thebanking sector behaves procyclically. The FCI refers to contribuon
to economic growth; if it is negave, it decreases, if it is posive, itincreases GDP.
6
4
2
0
-2
-4
-6
-8
-10
6
4
2
0
-2
-4
-6
-8
-10
06Q1
06Q2
06Q3
06Q4
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
op gapRea GDPFCI
Per cen Per cen
Key developments in the nancialintermediary system
the nancia inermediary sysem f a cnry fs is
fncns he bes if i is capabe f resisng shcks andspprng ecnmic grwh wih he ecien acan f
resrces. the shck-absrbing capaciy f he Hngarian
banking secr is adeqae bh frm a iqidiy and a capia
adeqacy perspecve. the marked prcycicaiy f he nancia
sysem cnned decine in 2013, b he ending acviy f
dmesc nancia insns s des n adeqaey sppr
ecnmic grwh. Hwever, prcycicaiy, which has been
idened by he MNB as a majr risk, has decined, primariy
de he MNBs rae-cng cyce and he FGS.
In is Reprs n Sabiiy pbished in 2013, he MNB evaaedhe sabiiy f he Hngarian nancia inermediary sysem
sing ve key nancia sabiiy indicars3. As hese indicars
express a specic sae, as regards fre risks hreaening he
sabiiy f he nancia sysem, hey are nabe capre
a risks.
the vae f he FCI which shws he exen which he
nancia inermediary secr (banking sysem) cnribes
he anna grwh rae f rea GDP sggess ha he
peran f he banking sysem remained prcycica. once
again, he FCI exhibied a highy negave vae in 2013, whie
he p gap was as negave. therefre, he nanciasysem remained cnracnary and faied spr ecnmic
grwh de is weak credi sppy.
the bjecve f he pbican Trends in Lending anched
in 2013 is presen a cmprehensive anaysis f he aes
rends in ending and hep inerpre hese devepmens
apprpriaey. t his end, i eabraes n he devepmens
in credi aggregaes and ineres raes, and he ress f he
ending srvey, namey he demand fr ans perceived by
banks and credi cndins.
Ahgh he cnracn f ans he crprae secr did
n sp in 2013, he decine was ess prnnced, in which
he FGS payed a eading re. the high isan f he rs
phase f he FGS (see Chaper 3.1) and feedback frm credi
insns and represenaves f he privae secr sgges
ha he FGS mbiised credi marke parcipans bh n
he demand and n he sppy side: severa crprans
recnsidered he nancing f heir bsiness acviy and
appied fr ans, which rned banks aenn he SME
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his deciency f he credi marke as we. Wih he maximm
en-year mariy spaed by he MNB, credi insns
were wiing prvide ng-erm ans wih an average
mariy f neary 7 years wih a xed, maximm ineres rae
f 2.5 per cen per annm n he end f he erm. the FGS
has reached every secr, wih he majriy f ans exendedin he secrs f agricre, rade and manfacring.
the FGS as redced he eve f cncenran acrss
he regins: reave a SME ans sanding, credi
insns disbrsed mre ans cmpanies in he
Shern and Nrhern Grea Pain regins, whie he share f
Cenra Hngary was signicany wer han i is in he vera
pri.
In view f he sccess f he FGS, he Mneary Cnci
decided cnne he Scheme. In he cnex f he
exended prgramme (n he end f 2014), he MNBcnnes prvide renancing ans wih a 0 per cen
ineres rae, which banks are awed add a maximm
premim f 2.5 percenage pins when hey exend ans
sing his faciiy. thanks he FGS, he cnracn f he
crprae an pri is expeced cme a ha in 2014
and 2015, and here may be a rnarnd in ending SMEs.
this nwihsanding, a ssained recvery in ending wi
reqire frher easing f credi cndins n he sppy side,
as even hgh cndins appeared ease smewha in
2013, hey s remained gh.
As regards he hsehd segmen, he FX an priaccmaed befre he crisis cnned cnrac, whie
new disbrsemens hi a hisrica w in 2013 befre an
imprvemen began, hanks ans prvided wih an
ineres rae sbsidy.
the high share f nn-perfrming ans represens a marked
risk he nancia inermediary sysem. As regards he
crprae pri, he nn-perfrming an ra remained
praccay nchanged a exremey high eves in 2013, b he
imprvemen in he ecnmic grwh k has a psive
impac n he incme psin f he crprae secr.Ahgh banks pri ceaning acceeraed smewha
cmpared recen years, i is s cnsidered sw. Amid he
cnned cnracn f he crprae pri, he MNB
expecs he ra f nn-perfrming ans remain high, a a
eve f arnd 1820 per cen, in he nex w years.
In he hsehd an segmen, he nn-perfrming an
ra reached 18 per cen in 2013, b he MNB expecs he
ra decine in his secr ver he nex w years. the
indebedness f hsehds in freign crrency cnnes
pse a signican nancia sabiiy risk. Swiss franc-
denminaed ans pay a key re in he deeriran f he
pri. Indebed hsehds face increasing deb brdens
and higher insamens wing he apprecian f he Swiss
franc and rising bank ending raes, eading a decine in heir
cnsmpn and, in he wrs case, insvency. Meanwhie,
he increase in an-ss prvisins cver he rising sck
f nn-perfrming ans pses a seris chaenge banks.
Gvernmen prgrammes cnribe redcing he ra
f nn-perfrming ans, b he main prgramme, he
exchange rae cap, is nabe fy address freign crrency
indebedness in is crren frm. Even fwing he signican
exensin f he deadine fr enry, he isan rae f he
exchange rae cap scheme des n sbsanay exceed 50 per
cen. the qesnnaire-based MNBGfK srvey cndced
in 2013 reveaed ha haf f hse n parcipang in he
exchange rae cap scheme expained heir p- eiher wih
heir ack f cndence in banks r he increase in he brden
fwing he expiry f he grace perid. one qarer f hsen parcipang are hping fr a gvernmen measre mre
favrabe han he exchange rae cap.
the prabiiy f he Hngarian banking secr remained
w dring 2013. Fwing years f heavy sses, he banking
secrs pre-ax prs amned js HuF 143 biin a he
end f December 2013. Anher aspec f banks prabiiy
was he arge degree f asymmery in he perfrmance f
individa parcipans. the w prabiiy f he Hngarian
banking secr and is sbded prabiiy k cnne
be a cmpeve disadvanage in he acan f paren
bank fnds incding capia he regin.
Abei wih swing dynamics, he w f freign fnds
(primariy paren bank fnds) frm Hngary cnned in 2013.
the wihdrawa f freign fnds was accmpanied by a sigh
increase in swaps sanding and he banking secrs parae
baance shee adjsmen. the fac ha he an--depsi
ra drpped bew 110 per cen as pins redced
reiance n exerna nancing, ahgh his decine came
a ha in he secnd haf f he year, mainy becase f he
w f hsehd depsis. I is ny de he sbsana
amn f iqidiy in he banking secr and he cnnedbaance shee adjsmen f hsehds ha his arge w
f fnds did n case any maeria ensin in banks baance
shees.
In 2013, bh he liqidiy Sress Index (lSI) and he Svency
Sress Index (SSI) shwed w vaes. the liqidiy Sress
Index is 10.7 per cen, which means ha if he sress scenari
maeriaised, ny a few f he parcipans in he banking secr
wd fa bew he regary minimm. I is as favrabe
ha a he individa eve, a banks wd remain iqid even
in a pena sress scenari. Banks shr-erm iqidiy is
mre han wice he regary reqiremen, meaning ha
heir ps-sress iqidiy srps wd exceed he regary
26 ANNuAl REPoRt 2013
MAGYAR NEMZEtI BANK
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minimm, b his srps is mainy avaiabe in frin. As a
res, smh fncning f he swap marke is indispensabe
in a prraced sress scenari.
the capia adeqacy ra f he banking secr increased
dring he year, appraching 17 per cen. the signican sses
incrred in 2012 were argey se by he capia increasesf paren banks, ahgh severa insns sered sses
in 2013 H1 again. therefre, in he 2013 sress es he
banking secrs inia capia psin and shck-absrbing
capaciy did n imprve cmpared he end f 2012. this
is as cnrmed by he Svency Sress Index, he eve f
which remained ams nchanged cmpared he end f
2012. Ahgh average capia adeqacy is sasfacry, he
aggregae indicar cnceas signican asymmery. Whie
expeced sses decined smewha in he sress scenari
cmpared r previs sress es, he earnings capaciy
f banks as deeriraed. Accrdingy, w majr banks mayhave addina need fr capia ver a w-year hrizn. Even
hgh he banking secrs a capia need f HuF 116
biin is cnsidered signican, his risk is manageabe wih
paren banks cnned cmmimen.
Macroprudenal regulatory and resoluonacvity of the MNB
As regards nancia regan, he ms signican even f he
year was he impemenan f he spervisry inegran,
in parae wih which he new MNB Ac enering in frce n
1 ocber 2013 reinfrced he macrprdena mandae f
he MNB, prviding i wih he apprpriae se f insrmens.
In ine wih is reinfrced mandae, he MNB esabishes he
macr-prdena picy fr he sabiiy f he enre sysem
f nancia inermedian, wih he bjecve f enhancing
he resiience f he sysem f nancia inermedian and
ensring is ssainabe cnribn ecnmic grwh. tha end and wihin he imis specied in he MNB Ac, he
MNB expres he bsiness and ecnmic risks hreaening
he sysem f nancia inermedian as a whe, prmes
he prevenn f he devepmen f sysemic risks and
he redcn r eiminan f sysemic risks which have
evved. Frhermre, in he even f disrbances he
credi marke i cnribes he baanced fncning
f he sysem f inermedian in nancing he ecnmy
by smang ending r in he even f excessive credi
w by resraining ending.
the sa f he MNB acvey sppred he spervisry
inegran by preparing prfessina maerias and by
ering pinins in respec f he new MNB Ac. Befre he
cmmencemen f he egisave wrk perfrmed nder he
direcn f he Minisry fr Nana Ecnmy, he expers
f he MNB drew p prfessina discssin maerias. on
he ne hand, his incded he prpsa fr srenghening
he macrprdena fncn f he cenra bank and he
insrmens be depyed fr his prpse, and n he
her hand, i emphasised he imprance f reinfrcing
he individa spervisin f nancia insns, which
cd be achieved by inegrang he Hngarian FinanciaSpervisry Ahriy (HFSA) he ahriy respnsibe fr
micrprdena des in he cenra bank.
Hsed by he MNB, he V6 Financia Sabiiy Meeng was
hed n 2 Sepember 2013 wih he parcipan f he
eaders f he cenra banks and spervisry ahries f
Cenra and Easern Erpean cnries. the crren isses
discssed a he meeng incded, amng her pics, he
se f macrprdena picy and insrmens in a cenra
bank inegraed wih a spervisry ahriy; he eecs and
chaenges f he banking nin and cse cperan innn-er area cnries; isses cncerning he nancing f
sma and medim-sized enerprises wih a specia fcs n
he prspecs and imians f cnercycica picy, in he
cnex f which he presenan f he FGS and is ress
were given specia emphasis.
In he amn, he expers f he MNB payed a prminen
re in prviding pinins n he new Ac CCXXXVII f 2013 n
Credi Insns and Financia Enerprises and he reaed
amendmens exisng acs n nancia maers enering
in frce as f 2014. the new regan was necessiaed
by he impemenan f he Erpean unin direcve (CRD
IV) n he prdena reqiremens fr credi insns and
Chart 7
Liquidity Stress Index and Solvency Stress Index
60
50
40
30
20
10
0
Svency Sress Indexliqidiy Sress Index
60
50
40
30
20
10
0
09Q1
09Q2
09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
12Q1
12Q2
12Q3
12Q4
13Q1
13Q2
13Q3
Note: The Liquidity Stress Index is the sum of normalised liquidity
decits relave to the 10 per cent level, weighted by the balance sheettotal. The higher the indicator, the greater the liquidity risk in the stress
scenario. The Solvency Stress Index is the sum of normalised capitalshortages relave to the 8 per cent level, weighted by the capitalrequirement. The higher the value of the index, the higher the solvencyrisk in the stress scenario.
Per cen Per cen
REVIEW oF tHE MNBS PERFoRMANCE IN 2013
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invesmen rms, as a res f which he macrprdena
pwers f he MNB were frher reinfrced as frm 2014, as
he macrprdena insrmens f he MNB were caried
reave he Ac in frce since ocber, and he cenra bank
received new insrmens sarng frm 2014.
In addin he impemenan f he spervisry
inegran and he reinfrcemen f he MNBs
macrprdena fncn, as f 1 ocber 2013 he MNB Ac
designaed he MNB as a fre resn ahriy. Based
n he reevan Erpean unin direcve, he resn
framewrk wi be dened by separae egisan, which
is expeced be adped by Pariamen in he rs haf f
2014. Fwing he enacmen f his egisan, he new
resn fncn wi hep ensre ha he individa
crisis f a credi insn r an invesmen cmpany des
n evve in a sysemic prbem r impair he fncnscnsidered crica frm he perspecve f he nancia
sysem. Resn may be viewed as an rdery aernave
f he iqidan prcedre in cases when iqidan wd
n be a reasnabe aernave de he cnsiderans
ined abve, ye i wi n be he sae (axpayers) ha
are expeced bear he brn f he irrespnsibe nancia
managemen f he insn cncerned becase f he
derimena sysemic eecs. Resn css are primariy
brne by he wners and credirs f he insn and he
parcipans f he secr.
In 2013 Q4, in rean is new resn des, he MNBcmmenced preparans fr is re as a resn ahriy.
As par f his wrk, he Financia Sabiiy Cnci adped
a resn cncep which denes, amng her hings, he
framewrk fr he appican f resn s and he
nancing backgrnd f resn. thereaer, he Cnci
aid dwn an impemenan radmap in ine wih he
cncep, deaiing frher fre asks fr he MNB in rean
resn. the MNB shared he prpsed regans
apprved by he Financia Sabiiy Cnci wih he Minisry
fr Nana Ecnmy, i.e. he minisry respnsibe fr making
preparans fr he fre Hngarian ac n resn.
In 2013, he expers f he MNB mnired he inernana
regary prcesses reevan he nancia sysem and
acvey parcipaed in cmmenng n dra regans be-
ing prepared in he Erpean unin. the MNBs sa ered
pinins n he direcve and dra regan n he prdena
reqiremens fr credi insns and invesmen rms
(CRD IV/CRR) impemenng he prpsed Base III regary
framewrk wihin he Eu, which was evenay adped in
Jne 2013. the rs piar f he banking nin, i.e. discssins
n he Singe Spervisry Mechanism (SSM), reached is na
phase as we, and he reaed regans were adped by
he Erpean Pariamen n 12 Sepember 2013.
In he cnex f preparans fr is resn asks, he
MNB mnired amendmens he egisan harmnising
nana resn ahries and insrmens a he
Eu eve (Bank Recvery and Resn Direcve, BRRD)
and parcipaed in he prcess f cmmenng n he
reaed dras, as crdinaed by he Minisry fr NanaEcnmy. In December 2013, he Erpean Pariamen and
he Ecn Cnci reached an agreemen n he BRRD.
Anher newrhy even in he Erpean unin invved
devepmens in he Singe Resn Mechanism (SRM)
eg f he banking nin, in respec f which Member Saes
as reached a cnsenss a he end f he year. Bh f
hese devepmens may have an impac n fre resn
regans in Hngary. on he ne hand, frm 2015 a
Member Saes wi be reqired cmpy wih he naised
BRRD (he versin apprved by he Erpean Pariamen),
which herefre prvides a cear basis fr drawing p heHngarian resn framewrk and egisan. on he
her hand, he SRM inences he decisin n Hngarys
accessin he banking nin; herefre, pn deveping
and sbseqeny represenng he discssin cncep i is
impran ensre ha he deveping sysem is as in ine
wih Hngarian cnsiderans.
As sa, he MNB represened isef in inernana
rganisans and insns and, as an ahriy wih a
macrprdena mandae, i sppred he wrk f he
Erpean Sysemic Risk Bard (ESRB) and he Erpean
Banking Ahriy (EBA) by acvey parcipang in hecmmiees and wrking grps f hese Eu rganisans.
3.3 FINANCIAL SUPERVISION ANDCONSUMER PROTECTION
Integraon of the Magyar Nemze Bankand the Hungarian Financial SupervisoryAuthority (HFSA)
In is sessin n 16 Sepember 2013, he Pariamen adped
he dra egisan n he Magyar Nemze Bank (MNB),
which decided n he inegran f he fncn f nancia
spervisin in he cenra bank. the bjecve f he dra
egisan was ensre ha, as in severa her cnries,
cenra bank and spervisry acvies are perfrmed by
a singe rganisan; i.e. he Hngarian nancia secr is
spervised by he harmnised appican f inercnneced
micr- and macrprdena insrmens. In ine wih he
adped egisan, he handver-accepance prcedre
beween he Hngarian Financia Spervisry Ahriy
(HFSA) and he MNB k pace n 1 ocber 2013. As f 1
ocber 2013, he frmer righs and bigans f he HFSA
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as dened in Arce 176 f he MNB Ac were cnferred pn
he MNB.
the handver-accepance prcedre was ecien and did n
case any disrbance in day--day wrk. As a res f he
merger, he cassica cenra bank mandae and fncns wereenhanced by he expanded dimensins f respnsibiiy and
insrmens. the inegraed MNB exercises macrprdena
spervisin, which is inended ensre he sabiiy f he
enre nancia sysem and a heahy cnribn ecnmic
grwh; whie n he her hand, i exercises micrprdena
spervisin ver he insns cnsng he sysem,
hereby faciiang he enfrcemen f cmprehensive
sysem bjecves a he individa eve. the MNB as carries
marke srveiance and nancia cnsmer precn
des. these asks are n independen f ne anher: hey
ensre he sabiiy f he nancia sysem and he ecienperan f he nancia inermediary sysem geher, in
cse ineracn
Structure of the MNBs professional areas delegated to
the Deputy Governor responsible for the supervision of
nancial instuons and consumer protecon
As f 1 ocber 2013, he rganisana nis nder he
Depy Gvernr respnsibe fr he spervisin f nancia
insns and cnsmer precn assmed ms f he
previs asks f he HFSA. the direcraes esabished
wihin he new rganisana srcre are respnsibefr he spervisry acvies reaed specic nancia
areas. the Execve Direcr f Financia Insns
Spervisin spervises he Direcrae fr Credi Insn
Spervisin, he Direcrae fr Insrance, Pensin Fnds,
Financia Enerprises and Inermediaries Spervisin and
he Direcrae fr licensing and lega Enfrcemen. the
Execve Direcr respnsibe fr cnsmer precn and
marke spervisin versees he acvies f he Direcrae
fr Cnsmer Precn and he Direcrae fr Marke
Spervisin. In 2013, he Direcrae fr Mehdgy and
he Financia Cnsmer Precn Cenre repred direcy he Depy Gvernr.
Development of the MNBs supervisory strategy
Fwing he inegran, here was a need devep a
sraegy bi n he new rganisana framewrk and
empying he MNBs expanded se f insrmens. In
deveping he spervisry sraegy fr he perid f 2014
2019, he sarng pin was he visin f an idea, smhy
fncning nancia secr and a srng spervisry ahriy
acknwedged and recgnised in he spervisry cmmniy
f he Erpean unin, capabe f cnsiseny and ecieny
shaping he nancia sysem. Dring his wrk, he missin
f he spervisry area was dened. the missin f he
MNB is mainain and sppr he sabiiy f he nancia
sysem and srenghen he cndence f parcipans bh
in he sysem and in ne anher wih he assisance f he
inegraed spervisry insrmens. the eadership f he
MNB designaed cndence and sabiiy as pririy vaesfr he spervisry area. the renewed sraegy ses a nmber
f ceary dened bjecves fr he nex ve years which he
MNB wishes achieve in he spervised markes and wih
respec f isef as an insn, by aking advanage f he
pprnies prvided by he insrmens a is dispsa.
the asks reqired fr he achievemen f he ng-erm
bjecves have been designaed fr each spervised secr
and spervisry area.
Micro-prudenal supervision
Supervision of credit instuons
Micr-prdena spervisin is inended faciiae he
prden peran f credi insns, spervise he
caref exercise f wners righs, idenfy and assess he
risks assciaed wih individa insns, migae r
eiminae risks, and ake prevenve measres in rder
ensre prden perans. Appying he framewrk
renewed and deermined by he mehdgy, he MNB
cndced a scheded inspecns. Bh in n-sie and -
sie micrprdena spervisin, pririy inspecn areas
incded he managemen and migan f high accmaedcredi risk a credi insns and he examinan f he
inspeced insns capia psin, prabiiy and he
ssainabiiy f is bsiness mde. In addin, specia fcs
was given he evaan f iqidiy and, in case f arge
banking grps, recvery pans were reqesed and examined.
In he cperave bank secr, he inegran f cperave
credi insns caed fr nn-sandard icensing and
spervisry asks, which were addressed by he MNB wih
inensive prfessina aenn. As he new Eu reqiremens
(CRD IV/CRR) fr credi insns and invesmen rms
enered in frce n 1 Janary 2014, preparans fr hesenew regans as payed an impran re, in addin
he spervisry wrk.
the spervisry ceges f nancia cngmeraes perang
in severa cnries are cperan frms fr nana
spervisry ahries, and cnse a par f he Erpean
spervisry srcre. In Cenra and Easern Erpe, ny he
MNB exercises eadership ver a banking spervisin c-
ege and i des s in rean he otP Grp. the MNB
parcipaes in he res f he Eu spervisry ceges as a hs
ahriy spervising he sbsidiary r he branch ce. In
perid nder review, he inernana asks reaed he c-
eges and he Erpean Banking Ahriy were cmpeed
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as scheded. on 23 ocber 2013, he Erpean Cenra Bank
pbished a cmmnican n a cmprehensive asse qaiy
review (AQR) be cndced in 2014 fr he 130 arges banksf he er area. Preparans fr acve parcipan in he
inernana review cmmenced as eary as 2013.
the phase scheded fr Q4 in he 2013 Inspecn Pan was
cmpeed; n 1 ocber 2013 a a f 32 inspecns were
in prgress, f which 13 inspecns were cmpeed by 31
December 2013.
Supervision of insurance companies, funds, nancial
instuons and intermediaries
Cnns risk-based spervisin and cperan wihhe aeced secrs and spervised insns prceeded
smhy in he perid nder review. Wih he impemenan
f he spervisin pan deveped ensre he simanes
enfrcemen f prdena and cnsmer precn aspecs,
he MNB sccessfy ensred he smh prgress f marke
rends whie as aking in accn brad-based csmer
ineress, n ny a he eve f individa insns, b
as a he eve f he enre marke and marke segmens.
Fcsing n pririy inspecn arge areas, he
cmprehensive inspecns f insrance cmpanies andfnds were cmpeed in f. Deciencies viang he aw
r cnsmers ineress were deeced in severa cases dring
he review f mr hird-pary iabiiy insrance pans and
ni-inked ife insrance pans in respec f ega, acary and
cnsmer precn aspecs, and dring he examinan
f he sck managemen f picies. In addin, prdena
risks were idened and addressed ypicay in rean
bsiness regisry sysems, he adeqacy f daa sppy and
he frman f insrance echnica reserves. In he n-
sie inspecn f vnary ma insrance fnds, pririy
aspecs incded he prper execn f member accn
seemens and he crrec creding f membership fees
individa accns in accrdance wih he apprpriae
Table 2
Number of inspecons at credit instuons, insurance companies, funds and intermediaries
Type of instuon Type of inspeconIn progress on
1 Oct 2013Launched aer
1 Oct 2013
Insrance cmpanies Cmprehensive 7 7
Pensin fnds Cmprehensive 8 2
Heah fnds Cmprehensive 7 3
Ma aid fnds Cmprehensive 1 _
Inermediaries targe _ 2
Credi insns Cmprehensive 30 4
Credi insns targe 2 _
disribn ra. As regards vnary pensin fnds, pririy
was given he examinan f indirec invesmen css ver-
ss direc css. As par f he spervisin f inermediaries,he scheded argeed n-sie inspecn was cmpeed, and
addinay, argeed -sie inspecns were cndced a
severa independen inermediaries. In rder eiminae he
iega pracces fnd dring he inspecn, he MNB issed
a resn. the MNB parcipaes acvey in deveping he
regans fr he Erpean insrance spervisin; i has a
permanen membership in he Bard f Spervisrs f he
Erpean Insrance and occpana Pensins Ahriy
(EIoPA) and in he ms impran EIoPA wrking grps
respnsibe fr wrking qanave and qaiave
regary sandards. the expeced changes in he regary
framewrk wi impy new spervisry asks as we. on hene hand, he res f he Ac n Insrance Insns
and he Insrance Bsiness peraining he gvernance
sysem as amended in accrdance wih he preparans
fr Svency II wi be inrdced, and n he her hand,
in he cnex f he omnibs II Direcve apprved by he
Erpean Pariamen in he spring f 2014, he naisan
and adpn f wer-eve egisan can cmmence in he
crse f 2014 and 2015. the Svency II Direcve and he
reaed regans ms be impemened in nana aw by
31 March 2015.
on 1 ocber 2013, a a f 23 inspecns were in prgress in
he secr f insrance cmpanies, fnds and inermediaries,
and 14 inspecns were anched aer 1 ocber.
Supervision of capital market instuons
In 2013 Q4, he MNB did n idenfy any circmsances
enaiing sysemic risks r warranng immediae acn amng
he spervised capia marke insns; cnseqeny,
here was n need fr exrardinary argeed inspecns r
cmprehensive reviews. In respec f insns prviding
invesmen services, in he nging spervisin and
inspecns he spervisry area fcsed mainy n prvisins
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reaed he precn f cien caims and cmpiance wih
he reqiremens cncerning he prvisin f infrman
ciens. Based n he ndings f he inspecns, he service
prviders had adeqae cverage fr cien caims, and he
segregan dergans and insciencies in daa sppy
which were fnd ypicay did n viae cien ineress.Deciencies were deeced in severa cases in respec f he
prvisin f infrman ciens, cien accn managemen
and rder managemen. the review f srced acvies
idened severa inapprpriae prcedres parcary in he
case f rading parms.
An addina pririy f he capia marke area was
faciiae he preparans f he aeced marke parcipans
fr he appican f Regan (Eu) N 648/2012 n otC
derivaves, cenra cnerpares and rade repsiries
(EMIR), and address he spervisry ahriy asks
be perfrmed in rder ensre he cmpiance f KElERKSZF wih he prvisins f EMIR. the icensing prcedre
f KElER KSZF as a cenra cnerpary prsan EMIR
and he reaed cmprehensive review and vaidan
prcess sared in Sepember 2013 based n he previsy
deveped mehdgy and risk managemen qesnnaire.
the icensing prcedre (preparan f risk assessmen,
peran f spervisry cege) is expeced be cncded
in he rs haf f 2014. As he aeced marke parcipans
seek gidance frm he MNB dring heir preparans, he
MNB prvides assisance hrgh infrman, presenans
and cnsans prvided hrgh varis channes, as weas dieren gideines pbished n he MNBs websie.
Based n he experiences f previs inspecns, as regards
fnd managers, pririy arge areas incded he inspecn
f dieren charges, he pri and fnd managemen
fees appied, as we as her expenses. As regards he
managed fnds, deciencies were idened in severa
cases in respec f cmpiance wih he res peraining
he regar and exrardinary prvisin f infrman
invesrs (faire pbish pri reprs; faire send
reprs he spervisry ahriy r deays in sending;
sbsanve deciencies in he reprs; faire pdae
key invesr infrman). In addin, n severa ccasins
Table 3
Number of inspecons at capital market instuons
Type of instuon Type of inspeconIn progress on
1 Oct 2013Launched aer
1 Oct 2013
Invesmen service prviders Cmprehensive 1
Invesmen fnd managers Cmprehensive 2 2
Venre capia fnds Cmprehensive 2
oher (KElER, KElER KSZF) Cmprehensive 2
he ne asse vae cacan was incrrec and herefre
he invesrs cmpensan was ae. In he case f rea
esae fnds, bservans were made ab he persn
f he prfessina appraising he rea esae r he ack f
regary pdaed appraisas. In severa cases, regans n
iqid asses and rea esae ypes were viaed. Sme assemanagers engaged in pri managemen were fnd
have viaed he res peraining he gahering f advance
infrman r he cmpsin f pris. Mrever,
pn examining ransacns beween he managed
pris, sme ransacns were fnd be derimena
ne f he pares r gave rise cncerns in respec f fair
marke pracces. Dring he review f venre capia fnd
managers, sme minr deciencies were idened in respec
f he eve f inerna regans and daa sppy.
of he inspecns cndced in 2013, 6 cmprehensive reviews
were anched a spervised capia marke insns in2013 Q4; a f hem are expeced be cncded in 2014
Q1. of he inspecns cmmenced befre 1 ocber 2013,
he cmprehensive review f 2 fnd managers cnned in
2014. In 2013 Q4, a review f an invesmen cmpany which
had cmmenced earier was cncded wih a decisin caing
fr measres, wih n penay impsed.
Market surveillance
the MNB akes acn agains nicensed r nregisered
bsiness acvies, insider rading r marke manipanwihin he framewrk f marke srveiance prcedres, and
as veries cmpiance wih he res peraining sck
exchange acqisins. Fr he mre ecien execn f
hese asks, he Financia Sabiiy Cnci apprved a new,
sandardised, predicabe and cnsisen marke srveiance
picy dening he appicabe measres and sancns,
which are garaneed have de resraining pwer ver a
parcipans f he mney and capia marke agains acvies
giving rise marke deviancies.
the MNB idened nregisered inermediary (agency)
services and nicensed invesmen services as key marke
risks. Cmpanies prviding he abve services were ypicay
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Table 4
Number of market surveillance invesgaons
13 Q4
Sbjec f invesgan: unicensed acvies Marke manipan
63
ta ne impsed (in HuFm) 584.2
engaged in nine frex rade and peraed an exended agency
newrk in rder reach a wide range f invesrs. In is marke
srveiance prcedres cndced in 2013, he MNB rigrsy
invesgaed he cmpanies engaged in he abve acvies, and
appied mre sringen sancns and penaes han sa in
rder crb his ndesirabe phenmenn. Rapid, immediae
spervisry acn was caed fr in severa cases whereprhibied marke manipan was sspeced. the sndness
f he spervisry decisins passed in he cases cncerned was
cnrmed by he fac ha marke parcipans acceped he
MNBs decisins cncding he invesgans wih exercising
heir righ f jdicia cnr, r, in he case f dispes, he cr
ring cnrmed he crrecness f he MNBs decisin.
the MNB k parcar care imprve he ransparency f
he acviy f sck exchange issers; ha end, i evaaed
and cndced argeed reviews f discsres n a cnns
basis. upn examining regar discsres, he MNB veried
he appican f inernana nancia reprng sandards(IFRS) amng ised issers in parcar. Aer assming
marke srveiance pwers, in he perid beween 1 ocber
2013 and 31 December 2013, he MNB cncded 8 marke
srveiance prcedres and 1 repeaed marke srveiance
prcedre, in which he marke srveiance ne amned
a a f HuF 584.2 miin.
the MNB pays an impran invesr precn re in he
icensing f capia marke issers by verifying cmpiance wih
sary regans fr a inia pbic erings. As par f
he icensing f issers, he MNB passed 227 resns and7 rings. owing egisave changes, arnd 75 per cen
f he prcedres were reaed he secr f invesmen
fnd managers, whie he remaining 25 per cen aeced
varis her areas f he capia marke (akevers, secriy
precn pans, apprva f IPo prspecs, ec.). As a
signican change, frm 1 Jy 2013 a cmmnicans in
respec f appicans and sbmissins dring he icensing
f capia marke prdcs are cndced eecrnicay.
Legal enforcement
In he cnex f is ega enfrcemen acviy, in 2013