Hungary's central bank building arsenal to fight terror and migrants

By bne IntelliNews February 18, 2016

Hungary's central bank is building an arsenal of weapons to protect itself against rising risks of terror because of the EU's migrant crisis, Governor Gyorgy Matolcsy said when questioned over the Magyar Nemzeti Bank's purchase of guns and ammunition for its security force.

The MNB bought 200,000 rounds of live ammunition and 112 handguns for its security company, according to documents posted on a public procurement website, Bloomberg reports. Additional protection is needed due to the rise of "international security risks" including bomb and terror threats and migration, Matolcsy said in a written response to a lawmaker who asked about the purchases, which was posted on the parliament website.

The MNB's expanded responsibilities also contributed to the need for further defences, he added. The central bank has taken over as the regulator of the financial sector, and recently took control of the Budapest Stock Exchange.

Under the stewardship of Matolcsy since 2013 - who as finance minister was credited as architect of the unorthodox economic policies of Prime Minister Viktor Orban's government - the MNB has spent millions of euro on real estate and fine art that it says is part of Hungary's national heritage. Like his close associate Orban, the central bank chief is fond of making extreme statements and starring in headlines.

At the same time, the MNB has been successful in helping reduce Hungary's external vulnerability by lowering state forex debt, and helping spur economic growth. Analysts, however, tell bne IntelliNews that deputy Governor Marton Nagy is actually the brains behind the central bank's strategy.

Matolcsy, meanwhile, enjoys playing the maverick. The governor has roundly rejected criticism of his unorthodox spending, insisting the central bank has the right to spend its profit.

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