Júlia Király, an associate professor in Budapest and former deputy governor of the Hungarian National Bank, shares her frontline experiences during Hungary's financial turmoil. She discusses how Viktor Orbán's government challenged central bank independence post-crisis and the alarming parallels with global political shifts, particularly regarding Donald Trump's influence on democracy. Király highlights the importance of transparent decision-making within central banks and the ongoing struggle to restore investor confidence amidst political chaos in Hungary.
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question_answer ANECDOTE
Fidesz Centralized Power Post-2010
Hungary's Fidesz government centralized power after 2010, dismantling checks and balances.
They nationalized private pension funds to fund unconventional economic policies.
insights INSIGHT
Central Bank Independence Matters
Central bank independence is legally protected in the EU to ensure price stability and avoid political interference.
Fidesz tried to dismantle MNB independence but faced legal pushback from the European Commission.
question_answer ANECDOTE
Central Bank Purge in 2013
After the 2013 change, new central bank governor fired two-thirds of managers overnight.
Júlia Király resigned before her term ended due to loss of influence and central bank independence.
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Hungary and Other Emerging EU Countries in the Financial Storm
From Minor Turbulences to a Global Hurricane
Júlia Király
Júlia Király's "Hungary and Other Emerging EU Countries in the Financial Storm" offers a firsthand account of navigating the 2007 financial crisis within the Hungarian economic system. The book details the challenges and strategies employed during this period of significant economic turmoil. Király's insights provide valuable context for understanding the complexities of managing a crisis in an emerging economy. The narrative likely includes policy decisions, market reactions, and the political landscape influencing economic choices. The book serves as a case study for crisis management and economic policy in similar contexts.
Donald Trump is putting liberal democracy through its greatest test in 80 years.
None of it is original. His style of rule is straight from the democratic backsliders' playbook. To secure long-term power rather than short-term office, rulers must take over the institutions that check and balance majority rule and bend them to their will. Trump has tamed Congress and inserted his people into the Supreme Court, law enforcement, intelligence, and competition regulation but - to his great frustration - the Federal Reserve is holding out.
It was the same story in Hungary after Viktor Orbán returned to the premiership in 2010. Bound by EU law and the mandates of the governor and his deputies, Orbán had to wait three years to break the national bank. One of those deputy governors, Júlia Király, experienced state capture from the inside and resigned with a public protest at the loss of institutional independence.
Now an associate professor of finance and monetary economics at the International Business School in Budapest, she began her career under socialism at the statistics and planning offices. As deputy governor, she was part of the team that managed the Hungarian economy through the post-2007 financial crisis – an experience she chronicles in Hungary and Other Emerging EU Countries in the Financial Storm: From Minor Turbulences to a Global Hurricane (Springer, 2020).
Tim Gwynn Jones is an economic and political-risk analyst at Medley Advisors, who also writes and podcasts at www.242.news on Substack.
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