The Hungarian Financial Supervisory Authority (PSZAF) has responded to plans of its amalgamation into the central bank (NBH). The President of the watchdog said the supervision could function well even as part of the national bank.

For the supervision to operate well the current functions of the PSZAF and the NBH will need to be retained in a transparent way and relatively separated even within the integrated organization, PSZAF President Karoly Szasz told a press conference in the southern town of Pecs on Thursday.

"If this step improves the already high-quality job, I'm glad this step will be taken," he added.

The NBH sent the watchdog its discussion paper on the integration of the PSZAF into the central bank and the strengthening of the macroprudential framework on 2 May.

"Based on international best practice and past experience in Hungary, it is appropriate that the MNB should be the institution primarily responsible for the conduct of macroprudential policy. To perform the tasks related to macroprudential policy the MNB has to provided with an adequately wide and clearly defined set of macroprudential regulatory tools. It is also reasonable to consolidate broader financial stability responsibilities and tools within the MNB," the bank said.

The central bank believes that the consumer protection, market supervision as well as capital and insurance supervision functions of the PSZAF can also be integrated into the central bank, the document said.

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HUNGARY PSZAF President says integration into NBH good idea