Legal changes made the Bank of Hungary formally independent of the

government in 1991, with further legislation in 1992 and 1994. The law is

equivocal about central bank autonomy in the formulation of monetary policy. In

contrast to Poland, a monetary policy council composed of an equal number of

central bank and political appointees determines monetary policy. The central

bank governor is appointed to a six-year term and since 1991, can be recalled

only for gross misdemeanor. (The central bank governor and four deputies were

dismissed in 1991, days before legislative changes went into effect providing

greater protection from arbitrage dismissal). Central bank lending to government

is limited annually to 3percent of planned government revenue, excluding

receipts from privatisation, and credits of one-year maturity. The bank’s legally

stimulated goal is principally to maintain the domestic and foreign value of the

currency, but the law also charges the bank to support the government’s

economic program. Although Hungary’s legislation does not make it one of

Eastern Europe’s more independent central banks, the nation does have a

provision unique among the region’s central bank laws that instructs the Bank of

Hungary to “warn the government and, if need be, turn to parliament and the

public”, if it “deems that the economic policy or practical activities of the

government endanger the stability of the economy”.