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Oct 29, 2019

Central Bank Governor: Why can’t we, Hungarians, for once be on the winning side of a global clash?

György Matolcsy, Governor of Hungary’s Central Bank, draws parallels between global economic conflicts of our time and the Thirty Years’ War.

In a short essay published on economic news portal Növekedés.hu, Central Bank Governor György Matolcsy shares his view on the contemporary United States-China trade war, Europe’s role in the game and Hungary’s chances of finally making it to the winning side.

According to Matolcsy, the United States responded to the challenges posed by the rise of the euro in 2003. It launched a “new Thirty Years’ War”, similar to the one that took place between 1618 and 1648, but instead of the Czech, Danish, Swedish and French, the war now included Iraqi, English, Russian and Chinese phases.

Now, in 2019 – the Central Bank Governor argues that it is like being back in 1634 at the end of the Swedish phase, just before the French: we are nearing the last minutes of Russian sanctions and entering a period of US-China trade war.

Matolcsy writes that our not so distant future will be determined by four key elements:

1. The clash between the US and other powers will continue on all fronts, but an all-out US-China war seems avoidable. The US has realized it can’t win it and China has never even wanted to engage in it.

2. The United States focuses on leading the Western world – a goal jeopardized by the rise of the euro and a Europe slowly progressing towards a United States of Europe. But the euro will not be a threat to the dollar: because of Brexit, the weakening of the German economy, cracks in the Franco-German axis and mass immigration.

3. Europe will remain a political, economic and financial battleground as the new Thirty Years’ War won’t stay only in Asia. It will be our major economic partners that will feel most of the war’s burden.

4. The United States will attempt to lock China in East Asia without a global war, surrounding them by adversaries – leading to a dual world: a world of Global2 cooperation and War2 conflict. 

In this world, according to Matolcsy, Hungary can only make it to the winning side if it continues to adhere to the three fundamental underpinnings of our post-2010 success: political stability, financial balance and economic growth.

Photo credit: novekedes.hu