Mission adapted: the hidden role of governors in shaping central bank operating missions in Hungary
In this article, Makszin developed a conceptual framework for the operating mission of an independent Central Bank and traced changes in the operating mission of the Hungarian National Bank over its recent 27-year history together with Sebők and Simons. This study aims to understand the dynamics of the shifting operating missions of the CB in post-regime change Hungary.
- Miklós Sebők, Kristin Makszin & Jasper Simons
- 31 March 2021
- Mission adapted: the hidden role of governors in shaping central bank operating missions in Hungary
Despite the diffusion of the paradigm of central bank independence, there is still meaningful variation in the operating missions of central banks both across countries and over time. Through a detailed qualitative case study, this article develops the concept of the operating mission of the central bank and applies it to the case of the Hungarian National Bank (MNB) to provide a more complete understanding of mission shift. By relying on unique interview data with representatives of each MNB leadership since the establishment of the independent monetary authority they created a valuable platform for stuyding the interaction of international norms and policy transfers, domestic politics and economic ideology.
Their findings point to the critical role of policy agency, even as the diffusion of the paradigm of CBI and that of inflation targeting led to increasingly harmonised formal missions. Interview evidence shows that the individual approaches of particular governors moulded the resulting operating mission of the CB. This suggests significant room for manoeuvre even in the face of dominant international norms. The study also indirectly showed the limitations of some alternative explanations of changing operating missions, such the party politics thesis which focuses on appointments as the means of keeping central banks in check.
Read the whole article here