Photo: iStock
Marcell Horváth
08/01/2025 06:01
To develop forward-looking policies, we need to understand the deepest sources of success. As György Matolcsy's - governor of the central bank - concept says, the combination of talent, technology, capital and cognition (2T2C) has always been essential to achieve breakthroughs, but today it is more important than ever. As in earlier periods of history, new ideas and great research results are being generated in Europe. But we need to renew and refresh our ability to turn money into capital, to target funding to the most competitive sectors, the most innovative companies and organisations. This requires an understanding of the nature of knowledge and knowledge networks. Knowledge depends on creativity and, when applied properly, it leads to new ways of thinking, new approaches and new solutions. Moreover, knowledge is an exponential resource: it grows exponentially as it is shared. Successful international hubs - from China to Singapore, from South Korea to Kazakhstan - have been able to win over the past decades by valuing, replicating, connecting and sharing talent, technology, capital and cognition.
As participants at the Budapest Eurasia Forum pointed out, the region has witnessed a number of successful economic strategy shifts in recent decades, with China, South Korea, Singapore and the UAE all rapidly moving to the forefront of the world, and Kazakhstan, for example, setting an example in terms of effectively expanding innovation capacity.
A common factor in their success is their ability to identify and, at the same time, exploit their strengths, generating demand by creating supply, for example by training a highly skilled workforce and promoting world-class innovation. By focusing on innovation and knowledge-intensive industries, these countries have been able to turn to their advantage the challenges that may arise from their shortages of material resources - and have thus recognised that intellectual resources are the key to success in the information age.
All of the nations that are leading the way in sustainable development and growth have a strong vision for the future, based on strong traditional values, and are skilled at integrating modern and traditional elements, constantly researching new technologies, operating world-class education systems and focusing on talent, which is an essential element of the Hungarian model.
An important feature of the new era is that these trends do not necessarily culminate in a single country, but rather in some prominent city integrations, even cross-border city clusters or a network hub. Such complex financial, technological and knowledge hubs, or as the MNB's latest book summarising Hungarian-Chinese financial relations calls them, multi-hubs, have the following characteristics:
1) they have a concrete vision for their future;
2) they have developed a sovereign geopolitics;
3) have a stable political and economic structure;
4) they are embedded in the international financial world;
5) they have knowledge-based economic policies;
6) they have innovation at the top of their agenda;
7) have diversified trade and economic links.
It is also worth adding that central banks have a key role to play in regulating and guiding developments in innovation and digitalisation, in shaping the future of money and the vision of the future financial system, and in supporting the sustainability turnaround, education and culture.
Moreover, innovative and pragmatic central banks can create a balanced and cooperative network of international financial linkages from a geopolitical perspective, which is another pillar for the creation of financial hubs, alongside a diversified geopolitical approach. The expanding role of central banks as think tanks is a major contribution to the emergence of multi-hub financial-technological-intellectual hubs. Today, central banks are the driving force behind the emergence of financial hubs, in particular by creating an inclusive regulatory environment for commercial banks.
The MNB, under the leadership of György Matolcsy, has started to expand its financial links with the East in order to boost the country's economic recovery, competitiveness and financial stability, and has extended this opening to innovation, education and culture with a holistic approach.
The vision is therefore clear: Hungary must become a meeting point, a channel - a multi-hub - between the West and the East. Both Eastern and Western investors, banks and economies have an interest in Hungary's success.
The world is undergoing a major change unseen for 100 years. In this environment, the emphasis must be on win-win cooperation rather than zero-sum output. Indeed, win-win-win-win-win cooperation is needed. This also requires a shift to high quality development. In international relations, strategic independence or economic neutrality is important, as is mutual trust and mutual assistance, and win-win cooperation.
The author is Executive Director for International Relations at the Magyar Nemzeti Bank