Varga Mihály's inheritance and the protection of the forint: a difficult path leads to the Hungarian euro

Hungary's descent from the path of Eurozone accession is adventurous; Varga Mihály, the National Bank Governor, presented one version of the story at the Hungarian Economic Society's travel meeting. Political commitment to the introduction of the euro was given twenty years ago, but the conditions were not met due to economic policy mistakes; in the mid-2010s, Hungary met all the criteria, but economic policy was placed on "hold," and after 2020, a period of crises followed, and economic indicators deteriorated again; for years, not a single condition for entry was fulfilled, and now only one remains, inflation – as the President of the National Bank summarized the last quarter-century of developments. As if he were an outsider, an external observer. From 2013 to 2024 – as national economist and then finance minister – he was the main responsible party for the fiscal policy, one of the key figures of the last decade and a half. https://hvg.hu/gazdasag/20260910_varga-mihaly-euro-eurobevezetes-ertekeles-monetaris-politika-koltsegvetes-kozgazdasz-vandorgyules Varga Mihály bore a heavy legacy. In one part, in March 2011, as the State Secretary of the Prime Minister, he initiated a plus-clause to be included in the draft basic law, which establishes by constitutional force that "Hungary's official currency is the forint." This could only be changed by a two-thirds majority, and he expected that this proportion would be achieved even without Fidesz. In another part, he considered real economic preparedness more important than the formal fulfillment of the conditions. "If the father is driving, there is no need to cry. We are in a situation where we fulfill all conditions," he stated his position in March 2018, noting that as long as we do not approach the average economic performance of the Eurozone countries, we do not need to force accession. This was in line with the position of the MNB President Matolcsy György at the time, who believed that the adoption of a common currency had to reach 90 percent of the EU average development. As a government prerequisite, he promised Eurozone membership for decades. Then in the autumn of 2022, when the exchange rate of the forint soared, Varga Mihály unexpectedly alluded in a side conversation that "it is possible to think about joining the ERM II exchange rate system." A year later, he stated to the World Economy that "the planning and financing could have been simpler if we were members of the ERM II system," but at that time he also added: the introduction of the euro should not be rushed.