Hungarians Love Cash, Even More Than Before

The amount of cash in circulation in Hungary has hit a record in recent months. The explanation is likely to be the uncertainty caused by the war in Ukraine, but the central bank says there is no reason for Hungary to worry.

Never before has so much cash been in the hands of Hungarians as at the end of March this year, the business news site napi.hu reports quoting the business daily Világgazdaság.

According to the latest data from the National Bank of Hungary (MNB), the stock of cash in circulation increased by a further HUF 408.4 billion in March. Thus, Hungarian households and companies together now have HUF 8,303.9 billion banknotes in circulation. This is an extremely large amount, as the central bank noted in its statement: the average stock of cash in circulation increased sharply during the month.

The central bank did not go into further detail in the statement as to the reasons for the outflow, but in its reply to Világgazdaság, the MNB described what could have caused the cash holdings to grow so much. In their reply, they wrote that between February 10 and March 11, domestic cash demand grew very dynamically by more than HUF 550 billion, followed by a slight correction after March 16.

According to the National Bank of Hungary, the strong cash demand is partly due to the one-off impact of social transfers paid in February, such as the 13th month pension and the family tax refund, and partly to the initial economic and social uncertainty related to the outbreak of the war in Ukraine.