Scandals which have recently engulfed Hungarian brokerage firms highlight the necessity of a more stringent and scrupulous regulatory system for the domestic financial sector and the restoration of shattered confidence, Minister of State for Public Finances Péter Benő Banai told Echo TV.

As a result of amendment proposals formulated by the Ministry for National Economy and the National Bank of Hungary (NBH), which aim to restore stability of the financial system through tighter regulation and demanding more responsibility, will be finalized in the coming weeks. The draft provisions have been released for public consultation and they are available on the websites of the Ministry and the NBH. As the Minister of State stressed, as one of the key amendments the Government recommends an in-depth routine inspection at securities firms every three years instead of the current five years.

Since 2010, the Government has promoted the interests of Hungarian citizens -- including those in financial affairs -- and implemented stricter measures. The fair bank law has been one of these, and now the time has come to tighten regulation on securities firms. However, it has to be noted that the NBH has always been prudent and it has spent vast resources on spotting companies that had failed to fully comply with regulations.

As far as events of the past weeks are concerned, investigations are still ongoing. Therefore, it is too early to pin down the kind of fraud committed by financial enterprises at issue. At the moment, the main task which the Ministry and the NBH are facing is to jointly determine the responsibility of various parties in creating this fiasco, Péter Benő Banai said. Shattered confidence must be restored in the financial sector, and both revisions and legal amendments will serve this end. The Government hopes that as the sector is being rid of wrongdoers, law-abiding market participants can continue to operate after their past has been proven clear.

In case any organization promises yields that significantly differ from those offered by standard deposit accounts and central bank base rates, the offer must be treated with caution and examined more closely. It has to be noted that government securities are a safe investment option, as they generate predictable yields that beat inflation, the Minister of State explained.

(Ministry for National Economy)