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Head of Hungary’s Central Bank: Continued Centralization Will Ruin the EU

Tamás Vaski 2021.10.26.

György Matolcsy, Governor of Hungary’s Central Bank, has shared his projection of the European Union’s future, essentially calling for more sovereignty for European nations and a decentralized European Union.

His statement, published on pro-government daily Magyar Nemzet, György Matolcsy argues that there are two scenarios for the EU’s future until 2030, one which leads to the continent falling behind the rest of the world, while the other leads to it regaining its international relevance through approaches in line with the Hungarian government’s approach to the Union.

On Top of the World for 500 Years

Matolcsy states that Europe has been the global winner up until the 20th century. Through geopolitics, political and economic power, industrial and technological revolutions, and faster development, it was in control of the world for centuries.

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"Let us learn from the mistakes of the past so that we can all be winners," Matolcsy said, concluding with a quote: "Good is the enemy of better."Continue reading

Due to the world wars and Cold War of the 20th century, however, Matolcsy says that Europe has fallen behind, to the point where its nations have become “secondary actors” in the global community. This new historical period, characterized by a digital revolution, is one which Matolcsy believes will be defined by North American and Asian powers.

American Hegemony Over Europe

Matolcsy argues that since American troops stepped foot on European soil in 1917, the continent has been under the American sphere of influence. The world wars, the Cold War split, the rebuilding of Germany, integration, the introduction of the euro, and the Euro Crisis have all been influenced by American foreign policy.

The National Bank governor argues that due to these events, the EU has lost its sovereignty, saying that “Germany – the EU’s strongest economy – is in its essence an occupied nation, and the EU is not a sovereign decisionmaker.”

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Matolcsy insisted that the Baltic states, Poland and Romania had handled the crisis better than others, "including us Hungarians".Continue reading

Matolcsy says that due to the European Union’s failures, such as going against American interests, creating a more centralized Europe through the dream of a “United States of Europe,” and not trying to regain its lead after having fallen behind. He brings up a number of solutions to various events through the EU’s history, very much in line with a Europe that is less focused on centralization in favor of inter-state cooperation.

A European Doomsday Versus a New Golden Age

Given the United State’s rise to hegemony in the world, Matolcsy says the European Union has two options available to it. In the first scenario, Europeans give up their great power ambitions and align themselves with the American grand strategy. In the second scenario, European powers essentially continue on the path he says they are on, resulting in them suffering the consequences of American grand strategy throughout the course of the 2020s.

If the EU continues its attempts of centralization against American influence, Matolcsy says, there will only be further divergences between nation states. Debt will continue to be accumulated at both national and European Union levels, as well as within the Eurozone. Ultimately, European powers will fall too far behind the United States, the United Kingdom, and Asia.

In György Matolcsy’s ideal world, the European Parliament can be abolished, “shady legal centralization,” can come to an end, and

A formerly centralized circle of power can be returned into the hands of sovereign nation states. Multiple parallel monetary systems can come into existence, with their own monetary policies.”

It is clear that Matolcsy is in favor of an EU less focused on EU institutions, such as, for example, the Eurozone, and more in favor of national agency within a union built more on international cooperation of distinct units rather than joint legislation.

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"Our mediocre economic performance compared with that of our competitors this past decade was the result of a mediocre performance of government," Matolcsy said.Continue reading

It is also worth noting that the Central Bank governor is known to have a clear bias supporting Hungary’s national currency against the relevance of the euro. This, paired with the Hungarian government’s emphasis on national sovereignty instead of what Prime Minister Viktor Orbán calls the “liberal imperialism” of the EU, bears significance when looking into the administration’s thoughts on the future of the Union.

Featured photo illustration by Zsolt Szigetváry/MTI