Views from the Top: Transition and the Changing Mission of the Hungarian Central Bank

Given the diffusion of central banking independence, the mission of central bank(er)s is increasingly seen as isolated from volatile political dynamics within a country. Nevertheless we can detect meaningful variation in the missions of central banks both across countries and over time. This paper traces the changing mission of the Hungarian Central Bank over its recent 27 year history to investigate the influences that drive mission shift. This paper relies on unique interview data with each Hungarian central bank governor since the reestablishment of the independent Hungarian Central Bank in 1991. The multiple paradigms of central banking covered in this empirical data represents a valuable platform for studying the interaction of international norms (central bank independence), domestic institutions, and multi-level policy actors. In particular, we analyze these first-hand accounts to understand whether the self-proclaimed mission of governors made a mark on official mission of the central bank. Given its position as a candidate, and later member, of the European Union with the associated strict expectation of central bank independence, this case study represents a hard test for the influence of domestic level agency. Nevertheless our findings point to the critical role of policy agency, as the individual approaches of central bank governors molded the resulting mission of the central bank. This suggests significant room to maneuver even in the face of dominant international norms.