Template-Type: ReDIF-Article 1.0

Author-Name: Tamás Végső
Author-Workplace-Name: Magyar Nemzeti Bank
Author-Email: vegsot@mnb.hu

Title: Comparative Analysis of the Changes in Cash Demand in Hungary

Abstract: The strong growth of cash in circulation in Hungary seen in recent years seemingly
contradicts the changes in payment habits and can also be interpreted to show
that the development of the Hungarian payment system is falling behind relative
to other countries in Europe. Placing the Hungarian data in an international
context, this study attempts to provide a true and accurate picture of the situation
with cash usage in Hungary and uses the relevant literature to present the trends
in cash demand observed globally. One important conclusion is that, in terms of
their nature, transactional cash demand and cash demand for savings purposes
are clearly separated, with the latter primarily responsible for the expansion of the
volume of cash on a global scale. While the growth seen in Hungary may be high in
European comparison, taking into consideration changes in interest rate levels and
GDP it cannot be seen as extreme. Based on international trends, the realistic goal
for Hungary should primarily be to decelerate the expansion, as experiences show
that a nominal decrease in cash volume requires the long-term and concurrent
existence of several factors.

Classification-JEL: D14, E41, E42, E58
Keywords: cash demand, cash-to-GDP ratio, payment habits, electronic payments,
cash holdings, shadow economy, cashlessness
Pages: 90-118
Volume: 19
Issue: 1
Year: 2020
File-URL: https://en-hitelintezetiszemle.mnb.hu/letoltes/fer-19-1-st4-vegso.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:19:y:2020:i:1:p:90-118