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UPDATE 2-Hungary central bank reduces Vice Governor Nagy's role
March 6, 2017 / 9:41 AM / 9 months ago

UPDATE 2-Hungary central bank reduces Vice Governor Nagy's role

* Nagy no longer in charge of financial stability issues

* Forint weakens slightly, due in part to announcement

* Change to serve “more efficient” supervision -central bank (Adds central bank response)

BUDAPEST, March 6 (Reuters) - National Bank of Hungary Deputy Governor Marton Nagy will no longer be in charge of financial stability issues at the bank, the central bank said on Monday, removing a second major area of responsibility from Nagy within a week.

Nagy will remain in charge of monetary policy issues and improving bank lending, the bank said in the Official Gazette. The role will be filled by a director reporting directly to Governor Gyorgy Matolcsy in the new organisation structure.

Nagy has been the mastermind behind many of the bank’s unconventional monetary policies and important measures affecting the bank system.

It was not immediately clear why the bank decided to reduce his areas of responsibility. Last week, Nagy resigned his post as chairman of the Budapest Stock Exchange (BSE).

“The changes in the organisational structure of the National Bank of Hungary were needed to make the performance of the financial stability function more efficient,” the central bank said in an emailed response to Reuters questions.

The management of the central bank supported the measure unanimously, it said, adding that the changes were not unusual as organisational roles have changed several times in the past.

Nagy, a 40-year-old economist, was appointed central bank vice governor in September 2015 for a six-year term. Gyorgy Matolcsy’s term as governor will expire about a year after a parliamentary election due in April 2018.

In recent months, Nagy has scrapped regular media briefings and his media appearances have dried up. In his last major interview, Nagy told the newspaper Magyar Hirlap the central bank planned reforms to cut the cost of housing loans, which are more expensive than loans in other countries.

Nagy has played a key role in major reforms affecting Hungary’s banks. Those included measures to curb Hungary’s reliance on foreign investors in debt financing, a stimulus scheme to provide cheap loans to small businesses, and steps to cut borrowing costs with unconventional monetary policies.

The scope of Nagy’s responsibilities is still wide-ranging, including the central bank’s monetary toolkit, budgetary analysis and competitiveness issues as well as his role in the rate-setting Monetary Council.

“He had only substantial areas of responsibility, so whatever is taken away, that is a significant step,” a source said. (Reporting by Krisztina Than and Gergely Szakacs; Editing by Larry King)

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