Hungary's new central bank governor, former economy minister Gyorgy Matolcsy, launched plans to help small- and medium-sized firms survive economic recession and get cheap credit worth around $2.1 billion.
The plan was met with relief by markets, who had been expecting that Matolcsy, an ally of Prime Minister Viktor Orban, would adopt measures that were more high-risk to try to jump-start the spluttering economy. But some in the market have said they are concerned that the government might in the longer term erode the independence of the central bank and its ability to veto any policies that it feels endanger economic stability.
Julia Kiraly, the only one of the Monetary Council's eight members not appointed by Orban or his Fidesz party, said she had abstained from the debate and the voting on Thursday as she felt there was not sufficient time to consider the proposal.
In his first weeks as governor, Matolcsy dismissed three of the bank's most respected senior economists and put allies into key positions at the central bank. The bank has said the dismissals were designed to keep a lid on costs.
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