Local governments and banks face legal clash over new state treasury deposit rule

A new government initiative would force Hungarian municipalities to place most of their financial resources in accounts at the Magyar Államkincstár, sparking legal challenges from local authorities and major banks like OTP and MBH. The Hungarian Local Governments Association argues the rule could be unconstitutional and hinder daily operations. One unnamed municipality sued, asserting that the requirement deprives it of the ability to manage its own bank accounts, limiting both loan access and investment activities.

A presiding judge agreed that the regulation conflicts with constitutional safeguards for property rights, whereas the Treasury insists the law is mandated by legislation. Finance Minister Kármán András defended the policy, saying it temporarily does not require treasury deposits for local tasks and helps lower the central budget's net financing needs and public debt. He also downplayed concerns about lost interest income, stating that such earnings are not protected property but ancillary benefits.