Júlia Király, an associate professor of finance and former deputy governor of the National Bank of Hungary, shares her insights on Hungary's economic landscape under Viktor Orbán. She discusses the erosion of institutional independence and the impacts of populism on economic governance during the financial crisis. Király recounts personal experiences from her tenure, emphasizing how political influence shaped central bank policies. She offers a candid view on the challenges ahead for Hungary's economy, including leadership transitions and their implications for future stability.
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question_answer ANECDOTE
Fidesz’s Centralization and State Capture
Viktor Orbán's Fidesz party centralized power after 2010 elections by eliminating checks and balances.
They nationalized private pension funds and undermined institutions like the central bank's independence.
question_answer ANECDOTE
Central Bank Purge and Resignation
After 2013, the new central bank governor fired two-thirds of managers and sidelined deputy governors.
Júlia Király lost influence and resigned in protest against the loss of central bank independence.
insights INSIGHT
Consequences of Losing Independence
Loss of central bank independence led to unchecked inflation rises in Hungary reaching 23-25%.
Groupthink replaced debate, undermining rational monetary policy and stability.
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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 economic turmoil following the 2007 financial crisis. The book details the challenges and strategies employed by the Hungarian central bank during this period. Király's insights provide valuable lessons on crisis management and the importance of institutional stability. The narrative highlights the interplay between economic policy and political influence, offering a unique perspective on the complexities of managing a crisis-hit economy. The book serves as a case study for understanding the impact of global financial shocks on emerging economies and the role of central banks in mitigating their effects.
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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