MNB chief defends dividend payouts amid looming capital shortfall and probe

A day before his detention, György Matolcsy posted a new video on his YouTube channel to address accusations that the Magyar Nemzeti Bank (MNB) failed to use the 266.5 billion forints placed in its foundations for hospital construction. He argued that the central bank is legally prohibited from directly building hospitals or roads, but it can transfer its earnings to the central government, which may then allocate the money for public projects.

Matolcsy also highlighted that during his tenure the bank paid a sizable dividend to the state budget. Currently, the MNB’s balance sheet shows a deep capital shortfall, a situation that persists because a law amendment, backed by the European Central Bank, permits the bank to function with negative equity indefinitely. Critics question whether the bank’s leadership has unnecessarily amplified the losses, citing a 2022 episode of high interest rates that generated large deficits. Investigators are now probing the disappearance of foundation funds and alleged irregularities in real-estate transactions involving Matolcsy’s son, Adam, and his associates.