The European Commission Opened Legal Proceedings Against Hungary

European Commission, the EU executive arm, launched legal proceedings against Hungary due to the reforms conducted in the central bank and its judiciary. Prime Minister of Hungary, Viktor Orban, was given a month to respond to the charges.

Earlier this month, critics claimed that the new limitations imposed on the Central Bank of Hungary by the country, threatening its independence. Orban’s conservative party hold two-thirds majority in Hungary parliament.

The Hungarian government has said that it would try to “solve the problematic questions quickly” to avoid escalation of the legal dispute. The first step in the process which the European Commission launched yesterday is a warning to Hungary to change the controversial rules.
In the beginning of January, the Hungarian Parliament  took from the central bank president, Anders Seymour, the rights to appoint deputies, it expanded the number of members of the Monetary Council, which determines the interest rate, from 7 to 9, and created a third role as vice president Governor of the Bank. Separate law approved on Friday will dismiss the central bank president after that this institution will be merged, according to the plans, with the Securities Authority of Hungary.

After the publication of the new regulations the Central Bank said that they severely harm the national interests of Hungary, allow political interference in monetary policy, and threaten economic stability.

In recent weeks, Hungary lost its solid credit rating from S&P and Moody’s. The Hungarian forint currency fell by 15% compared to the euro since June 30, and so became the worst currency in its performance during this period.

European Commission President Jose Manuel Barroso said last Thursday that the EU will do its best to ensure that Hungary will comply with the norms and values ​​of the Union. “I’m sure we will achieve the goal,” Barroso said at a press conference in Copenhagen.