GYORGY MATOLCSY’S first day at work as governor of Hungary’s central bank, on March 4th, caused joy for government loyalists and gloom for foreign investors and the European Union. He is a close ally of Viktor Orban, the prime minister. As economics minister in Mr Orban’s government, he pioneered such policies as nationalising private pension funds, taxing foreign investors and fighting the EU and the IMF.
The fear is that, under Mr Matolcsy, the central bank will be subordinated to the government. He is one of “Orban’s most loyal soldiers” who has “completely destroyed the government’s fiscal-policy credibility,” says Mujtaba Rahman of Eurasia, a think-tank. “Now he risks doing the same to monetary policy.” Yet Mr Matolcsy downplays such fears. He has promised a conservative, responsible monetary policy and to safeguard the central bank’s independence.
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