Governor of the National Bank: Hungary is a laggard in competitiveness!

Hungary is a laggard in competitiveness, and the country will continue to bear the high costs unless it improves on this score, György Matolcsy, the governor of Hungary’s central bank (NBH), wrote in an article published on Monday.

Matolcsy argued that government economic policymaking needed to undergo root and branch change at the institutional level, geared towards boosting competitiveness. In the op-ed piece published in the online edition of Magyar Nemzet, he said it was not a question of if the next financial crisis happened but when, and in what form it would emerge.

“We must find the key that properly closes the gates to crises,”

he said, adding that it appeared at first blush that central banks held that key since they had been able to swell their balance sheets in order to combat various recent financial crises.

But this solution comes at a cost, he said, noting that financial bubbles have emerged around the world: as central bank balance sheets have ballooned together with public debt and budget deficit levels, economies have recovered while at the same time fuelling inflation.