The MNB's educational foundations are now officially world-(in)famous

HUNGARY - In Brief 02 May 2016 by Istvan Racz

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Today, the case of the MNB's educational foundations, which have become a key political issue domestically over the last two weeks or so, have made it to the front page of the Economist. The paper describes the case as a stupid political scandal, and indeed it is one of that type, most probably with limited short-term consequences but a likely significant long-term impact. As we explained it in our earlier monthlies, the case is about six educational foundations, set up by the MNB and capitalized with about HUF260bn (0.8% of GDP) out of the MNB's balance sheet in 2014. Originally, these foundations were deemed to fund post-graduate education, in the form of teaching unorthodox, anti-globalist economics of governor Matolcsy's style. The foundations came to the limelight recently because of a parliamentary amendment, which exempted them from the requirement to publicly report on their activities, which is usual for all foundations made out of public money. As it happened, the President of the Republic, János Áder, refused to sign the amendment into law, turning to the Constitutional Court instead. The latter declared the amendment unconstitutional. Soon thereafter, the Supreme Court ruled that the foundations must release data on their activities to the press, and so the latter eventually did. But that made things much worse for the MNB. Of course, opposition parties jumped on the issue at once, raising a long series of charges, some of them being criminal charges, against the MNB, managers of the foundations, and mainly Mr. Matolcsy himself. These include the alleged illegal setting up of foundations that have nothing to do with the central bank's mandate, illegally doi...